CESTAT, AHMEDABAD BENCH
Manan Motors (P.) Ltd.
Commissioner of Central Excise
Order No. A/269/WZB/AHD OF 2012
Appeal No. ST/237 of 2010
February 22, 2012
1. This appeal is directed against Order-in-Appeal No. 92/2010(STC)/HKJ/Commr.(A)/Ahd, dt. 17.03.10 vide which the first appellate authority has upheld the Order-in-Original of confirmation of the demand of the service tax liability, interest thereof and penalties imposed under various sections of the Finance Act, 1994.
2. Heard both sides and perused the records.
3. It is seen from the records that the appellant had accepted the liability to pay service tax on the services rendered by him under the category of business auxiliary services and has deposited the entire amount of the service tax liability along with interest before the issuance of show cause notice. It is also noticed that the appellant has paid an amount of 25% of the service tax liability as has been raised in the show cause notice on 05.01.10 after the issuance of the Order-in-Original.
4. It is to be noted that since the appellant is not contesting the service tax liability and has deposited the entire amount before the issuance of show-cause notice along with the interest and also discharged 25% of the amount of service tax liability, Board’s Circular No. 137/167/2006-CX-4 dated 03.10.07 will apply in this case wherein it has been clarified as under:
Circular: 137/167/2006-CX-4 dated 03-Oct-2007
Payment of Service tax/interest/penalty – Issuance of show cause notice and conclusion of proceedings – Clarifications
C.B.E. & C. Letter F. No. 137/167/2006-CX-4, dated 3-10-2007
Government of India
Ministry of Finance (Department of Revenue)
Central Board of Excise & Customs, New Delhi
Subject : Issuance of SCNs for Levy of penalty in the cases where service tax is paid suo motu by the assessee – Reg.
Section 73(1A) of the Finance Act, 1994 provides for conclusion of adjudication proceeding in the cases of wilful suppression/fraud/collusion if the taxpayer pays service tax liability along with interest and a penalty equal to 25% of service tax amount, within a period of one month from the date of issue of SCNs. Similarly, section 73(3) provides conclusion of adjudication proceedings in other cases on payment of service tax and interest.
2. A question has been raised as to whether the conclusion of proceedings in such cases is limited to the action taken under section 73 of the Act or all proceedings under the Finance Act, 1994, including those under sections 76, 77 and 78, get concluded.
3. The issue has been examined. The intention of section 73(1A) has already been explained vide para 8(g) of the post budget instructions issued by TRU vide D.O.F. No. 334/4/2006-TRU., dated 28-2-2006 [2006(4) S.T.R. C30], wherein it has been clarified that this sub-section provides for conclusion of adjudication proceedings in respect of person who has voluntarily deposited the service tax.
3.1 The relevant portion of section 73 is reproduced below, –
“Provided further that where such person has paid service tax in full together with interest and penalty under sub-section (1A), the proceeding in respect of such person and other person to whom notices are served under sub-section (1) shall be deemed to be concluded.”
Thus, law prescribes conclusion of proceedings against such person to whom SCN is issued under sub-section (1) of section 73. Therefore, it is not merely a conclusion under sub-section (1), but conclusion of all proceeding against such person. Similar is the position in respect of sub-section (3) of section 73.
4. Accordingly, conclusion of proceeding in terms of sub-sections (1A) and (3) of section 73 implies conclusion of entire proceedings under the Finance Act, 1994.
5. I find that the provisions of the section 73(1A) of the Finance Act, 1994 will apply in full force in this case, as there is payment of entire amount of service tax liability and interest thereof before the issuance of show cause notice. In my view, it is a fit case wherein the proceedings initiated against the assessee for the imposition of penalties, under various sections needs to be set aside and I do so.
6. Accordingly, the impugned order to the extent which confirms the imposition of penalties under Sections 76 and 78 in excess of the 25% of the amount of penalty paid by the appellant is liable to be set aside and I do so. The appeal is disposed of as indicated hereinabove.