VSE Stock Services Ltd. v. Commissioner of
Central Excise (Ahmedabad - CESTAT)
On receipt of intimation under
section 73(3), if there is short-payment by assessee, then, instead of
issuing show-cause notice straight away, department must send a letter
asking assessee to pay such amount
During the
periods from April, 2007 to July, 2007 and November to December, 2007,
the assessee had utilized Cenvat Credit of certain amount for payment of
Service Tax in respect of stock broker service provided by it. It was
found that this credit was not admissible to the assessee since it was
availed after end of the month and as soon as it was pointed out, the
assessee paid the amount with interest. Nonetheless, on verification, it
was found that there was a short payment of certain amount and this was
pointed out by way of issuing show-cause notice. In the impugned order,
penalty of Rs.5000/- was imposed under section 77.
The Tribunal set aside the penalty with the following observations.
- As per section 73(3), read with proviso thereto on receipt of intimation under section 73(3), if there was short-payment, then, instead of issuing show-cause notice straight away, department should have sent a letter asking assessee to pay such amount;
- Further, when the assessee had discharged short-paid service tax along with interest, show-cause notice should have been dropped;
- Hence, penalty under section 77 could not have been imposed, which was set aside accordingly.
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