Payment of Service tax/interest/penalty — Issuance of show cause notice and conclusion of proceedings — Clarifications
Subject: issuance of SCNs for levy of penalty in the cases where service tax is paid suo motu by the assessee - Reg.
Section 73(1A) of the Finance Act, 1994 provides for conclusion of adjudication proceeding in the cases of wilful suppression/fraud/collusion if the taxpayer pays service tax liability along with interest and a penalty equal to 25% of service tax amount, within a period of one month from the date of issue of SCNs. Similarly, section 73(3) provides conclusion of adjudication proceedings in other cases on payment of service tax and interest.
2. A question has been raised as to whether the conclusion of proceedings in such cases is limited to the action taken under section 73 of the Act or all proceedings under the Finance Act, 1994, including those under section 76, 77 and 78, get concluded.
3. The issue has been examined. The intention of section 73(1A) has already been explained vide para 8(g) of the post budget instructions issued by TRU vide D.O.F. No. 334/4/2006-TRU., dated 28-2-2006 [2006 (4) S.T.R. C30], wherein it has been clarified that this sub-section provides for conclusion of adjudication proceedings in respect of person who has voluntarily deposited the service tax.
3.1 The relevant portion of section 73 is reproduced below, -
"Provided further that where such person has paid service tax in full together with interest and penalty under sub-section (IA), the proceeding in respect of such person and other person to whom notices are served under sub-section (1) shall be deemed to be concluded."
Thus, law prescribes conclusion of proceedings against such person to whom SCN is issued under sub-section (1) of section 73. Therefore, it is not merely a conclusion under sub-section (1), but conclusion of all proceeding against such person. Similar is the position in respect of sub-section (3) of section 73.
4. Accordingly, conclusion of proceeding in terms of sub-section (1A) and (3) of section 73 implies conclusion of entire proceedings under the Finance Act, 1994. -
[Source : C.B.E. & C. Letter F. No. 137/167/2006-CX-4, dated 3-10-2007]
CAclubindia
