U.B. ENGINEERING LTD. Vs. CCE

JUDGEMENT

(1.) DURING the scrutiny of ST -3 returns filed by the appellant for the period from April 2006 to September 2006, it was noticed that there was considerable delay in payment of service tax by the appellants for each month during the period and consequently it was found that the appellants have failed to pay interest as required under Section 75 of the Finance Act for the delayed payment of service tax. Further, the return for the period from April to September 2006 was also filed on 29.11.06 (after a delay of 35 days). Consequently after adjudication and appellate proceedings, a penalty of Rs. 1,40,600/ - has been imposed under Section 76 of the Finance Act 1944.

(2.) SHRI S.J. Vyas, Learned Advocate, on behalf of the appellants submits that penalty is not impossible on the appellants in view of the fact that the service tax with interest had been paid by them and therefore in terms of Section 73(3) read with the proviso, the show cause notice itself was without authority of law and is unsustainable. He also submits that even the shortfall of interest amount of Rs. 215/ - arose because of one extra day taken by the bank in crediting the amount to the government account and this amount was also paid as soon as the same was pointed out to them and it was also paid before the adjudication order was received by them. Learned JDR on the other hand submits that penalty under Section 76 of Finance Act is mandatory and because of the delay in payment of service tax, the same has been correctly imposed.

(3.) FURTHER , Sub -section (4) of Section 73 reads as under: