Whether penalty should be imposed when service tax along with interest is paid before issuance of show cause notice?

Shriram EPC Ltd. Vs. Commissioner Of Service Tax, [2014 (35) STR 564 (Tri. – Chennai.)]


The Hon’ble CESTAT, Chennai held that the provisions of sections 73(3) of Finance Act, 1994 was issued with an intention to encourage immediate realization of short payments detected by audit teams so that whoever discharges the short paid tax immediately need not get entangled in protracted litigations. Therefore, unless there is a case of active suppression, provisions of Section 73(3) should be extended. Similar view was held by Karnataka High Court in the case of ADECCO Flexione Work Force Solutions Ltd. 2012 (26) STR 3 (kar.). Considering the decision of Hon. Karnataka High Court, the penalty imposed on the appellant was set aside. Thus the appeal was allowed.

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