In a recent case, the Allahabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) observed that service tax demand not valid when tax and interest paid much before issuing show cause notice (SCN). It was observed that since the said amount has already been deposited by the party alongwith applicable interest the same should not be confirmed and appropriated against the said amount demanded from them.
The Appellant, M/s Nimmi Buildtech Pvt. Ltd., is not contesting the demand and has deposited the entire demand of Rs.1,69,987/- alongwith interest of Rs.1,05,143/- on 12.02.2020. Subsequently show cause notice dated 27.08.2020 was issued proposing service tax (including cess) amounting to Rs.13,368/- on taxable value of Rs.89,120/- received under the head “Renting of Immovable Property Service” not paid by them should not be demanded and recovered from them by invoking extended period under proviso to Section 73 of the Finance Act, 1994.
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Since the said amount has already been deposited by the party alongwith applicable interest vide CPIN No.20020900127399 dated 12.02.2020, the same should not be confirmed and appropriated against the said amount demanded from them. Non payment of Service Tax (including cess) amounting to Rs.1,52,269/- on Legal consultancy service should not be demanded and recovered from the party under proviso to Section 73(1) of the Finance Act, 1994 by invoking extended period under proviso to Section 73 of the Finance Act, 1994. Since the said amount has already been deposited by the party alongwith applicable interest vide CPIN No.20020900127399 dated 12.02.2020, the same should not be confirmed and appropriated against the said amount demanded from them;
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Cenvat Credit amounting to Rs.6,93,347/- [Rupees Six Lakhs Ninety Three Thousand Three Hundred Forty Seven Only] (including cess) wrongly availed and utilized during the period from 2016-17 should not be disallowed and demanded/recovered from them under rule 14 of the CENVAT Credit Rules, 2004 read with sections 73 of the Finance Act, 1994, for the reasons. The Adjudicating Authority vide the impugned Order-inOriginal confirmed the demand and imposed penalty as proposed in the SCN.
On appeal before the first Appellate Authority the Commissioner (Appeals) upheld the Order-in-Original and rejected the appeal before him. Hence, the present appeal before the Tribunal. Departmental Authorized Representative justified the impugned order and prayed that the appeal being devoid of any merits may be dismissed.
It was observed that during the course of the audit of records of the party conducted by the officers of Audit Group-II, Circle-II, Kanpur on 28.01.2020 and 06.02.2020, covered the period from 2015-16 to June, 2017, some discrepancies regarding the payment of service tax under the category of “Renting of Immovable Property Services” and “Legal Services” were pointed to the Appellant Assessee and the Appellant Assessee accepted the same and deposited the service tax liability alongwith applicable interest vide CPIN No.20020900127399 dated 12.02.2020 which has been appropriated in the SCN itself.
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In the case of Venu Enterprises, the following has been held that, ”Admittedly, the tax as well as the interest has been paid much before the issuance of SCN; even the SCN does not point out to suppression of fact, fraud or misstatement etc., the alleged activity was observed by the Audit Party from the appellant’s ST-3 returns only and it is not the case of the Revenue that there was gross violation by act of suppression, etc. In this background and on the above factual position, I am of the opinion that the bonafides of the appellant could not be doubted and hence, it is a fit case to invoke Section 80 of the Finance Act.”
The single member bench of P.K. Choudhary, Member (Judicial) found no merits in imposition of the penalties under Section 78(1) of the Finance Act, 1994 and accordingly the same is set aside. The appeal filed by the Appellant is allowed in the above terms with consequential benefit.
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