No penalty under section 76 was leviable if Service Tax was paid belatedly with interest prior to issue of show cause notice

PROFESSIONAL COURIERS V. COMMISSIONER OF CUSTOMS, CENTRAL EXCISE & SERVICE TAX (Bangalore - CESTAT)

If service tax has been paid belatedly, with interest prior to issuance of show-cause notice, no proceedings can be initiated by the department for levy of penalty under section 76.

The assessee had failed to pay part of the service tax for the quarter ending December 2009 by the due date. However, it had paid the same alongwith the interest on 29-03-2010. The Department issued a show-cause notice for leving penalty under Section 76. On adjudication, penalty was confirmed.

The Tribunal deleted the penalty with following observations:

The High Court in CCE &ST v. Adecco Flexione Workforce Solutions Ltd. [2012] (Kar.) has held that after the payment of service tax and interest, the said information was to be furnished to the authorities, then the authorities won’t serve any notice under sub-sec. (1) of section 73 in respect of the amount so paid. Therefore, authorities have no authority to initiate proceedings for recovery of penalty under section 76. Further the Explanation added to section 73(3) of the Finance Act 1994 by the Parliament vide the Finance Act 2010 consolidates the assessee’s case. Thus, the impugned penalty order was to be set aside.