The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) observed that the show cause notice (SCN) is not required to be issued under Section 73(3) of the Finance Act, 1994 when tax deposited with the interest.
The penalty has been imposed by the adjudicating authority with the finding that the appellant had not deposited service tax on the basis of own ascertainment and that it was only after the department letter they deposited. The SCN was issued on 28.01.2010 for which the compliance was already made by the appellant on 24.11.2007 by way of payment of tax and interest.
The only grievance of revenue is that the appellant-assessee has not deposited service tax on their own ascertainment.
The counsel for the appellant submitted that in the facts of the its case, appellant has discharged the service tax along with interest much before the issuance of show cause notice. In the instant case, it was only a routine survey note that was issued by the Department seeking information with respect to commission paid to overseas service providers. Therefore, the benefit of Section 73(3) of the Finance Act was available to the Appellant.
A Two-Member Bench comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that “We find that when the tax amount stands already deposited with interest, the very SCN was not required to be issued under Section 73(3). Merely because the tax amount has been deposited on the basis of ascertainment by the Department, the assessee cannot be deprived of the benefit of aforesaid provisions, more so in view of the fact that no evidence has been adduced in the SCN that there was a deliberate short payment. Any other interpretation will render the said provision redundant inasmuch as the very intention of the said provision is to reduce litigation when compliance is made by the assessee.”
“In view of the above observations and settled position of law, we hold that the appellant’s case is fully covered by the provisions of Section 73(3) of the Finance Act, 1994 and the Revenue should not have issued show cause notice to the appellant for imposition of penalties. Accordingly, we set aside the penalties imposed upon the appellant under the Finance Act, 1994” the Tribunal concluded.
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