Whether penalty u/s. 76 would be leviable where service tax was deposited along with interest before issuance of show cause notice?

Sen Brothers vs. CCE, Bolapur (2014(33) STR 704 (Tri – Kolkata)

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 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.

Held:

The Tribunal relying on the Karnataka High Court in CCE,ST, LTU, Bangalore vs. Adecco Flexione Workforce Solution Ltd. 2012 (26) STR 3 (Kar), held that where Service Tax was deposited along with interest before the issuance of SCN, penalty u/s. 76 was not invokable