The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that no penalty can be imposed when the entire service tax discharged along with interest immediately before the issuance of show cause notice under section 78 of the Finance Act,1994.
National Power Engineering Company, the appellant assessee was engaged in the business of providing Works Contract Services and Business Auxiliary Services. The assessee appealed against the issuance of show cause notice and the imposition of penalty by the adjudicating authority for nonpayment of educational cess.
Narayan Kr. Agarwal, the counsel for the assessee contended that the assessee paid the Education Cess immediately on being pointed out by the audit department along with interest.
It was further submitted that as per section 73(3) of the Finance Act, no proceedings should have been taken up against the assessee, as the payments were made as soon as the payments were pointed out by the officials.
S. S. Chattopadhyay, the counsel for the revenue relied on the decisions made by the lower authorities and contended that the assessee paid the amount of educational cess immediately after the nonpayment was pointed out by the department.
The bench observed that under section 73(3) of the Finance Act, no show cause notice should have been issued when the assessee paid education cess along with interest immediately on being pointed out by the officials.
A single-member bench comprising Muralidhar (Judicial) quashed the penalty imposed by the adjudicating authority for nonpayment of educational cess before the issuance of show cause notice while allowing the appeal filed by the assessee.
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