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February 2016

[2015] 64 taxmann.com 243 (Allahabad – CESTAT) Amit Pandey Physics Classes vs. Commissioner of Central Excise & Service Tax, Kanpur

By Puloma Dalal
Jayesh Gogri
Mandar Telang Chartered Accountants
Reading Time 1 mins
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Even though some portion of service tax as determined by central
excise officer is paid before issuance of show cause notice (SCN), such
prepayment cannot be reduced while quantifiying penalty u/s. 78.

Facts
The
appellant neither declared services in returns nor paid the service
tax. He admitted his mistake during investigation and paid around 75% of
such liability prior to issuance of SCN. In the SCN, penalty u/s. 78
was imposed on entire service tax liability by ignoring such service tax
already paid. It was contended that service tax liability was not
correctly determined as amount already paid was ignored and hence, after
considering service tax already paid, penalty should be levied only on
25% of service tax which remained unpaid.

Held
The
Hon’ble Tribunal observed that since the assessee was aware of the
provisions of service tax and yet failed to pay tax on due date, central
excise officer correctly determined total service tax liability of
assessee in terms of provisions of section 73(2). Accordingly,
imposition of penalty u/s. 78 was on total tax liability quantified in
SCN was also held to be correct.

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