By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
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Whether penalty u/s. 76 would be leviable where service tax was deposited along with interest before issuance of show cause notice? Held, no.
Facts:
The appellant provided taxable services of commercial or industrial construction services and manpower recruitment agency service. The appellant was registered under Service Tax and was filing Service Tax returns. Due to the acute shortage of funds, the Appellant could not deposit the Service Tax. The department initiated proceedings for the non-payment of taxes. Later on, the appellant deposited Service Tax along with interest. A show cause notice was issued demanding service tax, interest and penalty u/s. 76.
According to the appellant, when the Service Tax along with interest was deposited before issuance of the show cause notice, then issuance of SCN itself was not warranted and further imposition of penalty u/s. 76 also was not called for in view of section 73(3) of the Finance Act, 1994. The Appellant relied on the decision of the Karnataka High Court in CCE, ST, LTU, Bangalore vs. Adecco Flexione Workforce Solution Ltd. 2012 (26) STR 3 (Kar) for issue of SCN post deposit of service tax with interest and also relied on the decision of the Karnataka High Court in case of Comm. of ST vs. Master Kleen – 2012 (25) STR 439 (Ka.) for non-imposition of penalty u/s. 76 where service tax was deposited with interest and intimation was given to department. In both the cases, the High Court held that if the assessee has paid service tax along with interest before issuance of SCN, the department should not waste its time in issuing SCN.
Held:
The Tribunal relying on the above stated decisions of the High Court held that where Service Tax was deposited along with interest before the issuance of SCN, penalty u/s. 76 was not invokable.
