The Hyderabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that issuance of show cause notice was not allowed under section 73(3) of the Finance Act,1994 when there was no evidence of willful short payments of service tax.
Shriram Life Insurance Co. Ltd, the appellant assessee was a life insurance company and was registered with the Service Tax Department and was depositing the admitted taxes and filing the periodical returns regularly and also in compliance to the Board Circular in respect of ‘group insurance schemes’, obtained the prescribed certificate from the appointed Actuary and accordingly paid the service tax on the composite policy (risk plus savings, etc.).
The assessee appealed against the order passed by the Commissioner (Appeals) for confirming the demand for service tax and for the imposition of penalty under section 78 of the Finance Act.
Aqeel Sheerji, the counsel for the assessee contended that the show-cause notice was not required to be issued given the provisions of section 73(3) of the Finance Act, there being no evidence of willful short payment of tax, nor of any fraud or suppression, as the entire service tax amount was deposited along with interest immediately after short payment of tax was informed by the audit party.
Rangadham, the counsel for the department relied on the decisions made by the lower authorities and contended that any service tax has been short-paid or short-levied because of fraud or collusion or willful misstatement, suppression of facts, or contravention of any of the provisions of the Finance Act or the Rules made there-under, with intent to evade payment of service tax.
The Bench observed that in the case of CCI Logistics Pvt Ltd VS Commissioner of CGST & C.EX Kolkatta North Commissionerate, wherein it was held that show-cause notice was not required to be issued given the provisions of section 73(3) of the Finance Act, there being no evidence of willful short payment of tax, nor of any fraud or suppression, as the entire service tax amount was deposited along with interest immediately after short payment of tax was informed by the audit party.
The two-member bench comprising Anil Choudary (Judicial) and A.K Jyothishi (Technical) held that no show cause notice was required to be issued on the assessee when there was no willful short payment of service tax.
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