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2025-VIL-603-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Service demand on bank charges, Invocation of extended period of limitation, Applicability of Section 73(3) and 73(4) of Finance Act, 1994, Suppression of facts - Service demand on charges/fees remitted in foreign currency to the foreign banks as structuring/processing fees for availing External Commercial Borrowings (ECB) - Appellant availed commercial loans in the form of External Commercial Borrowings (ECBs) from foreign banks. It paid certain charges/fees in foreign currency to the foreign banks as structuring/processing fees, which were leviable to service tax. The appellant suo moto deposited the service tax and interest amount before the issuance of the show cause notice – Issue of SCN invoking extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994 was invoked, and penalties under Sections 77 and 78 - Whether the SCN could have been issued to the appellant in view of the provisions of Section 73(3) of the Finance Act, 1994, as the appellant had made payment of service tax with interest prior to the issuance of the notice - HELD - It is not disputed that the appellant had deposited the entire amount of service tax with interest much before the issuance of the show cause notice and had intimated the department. In such a situation, the SCN under sub-section (1) of Section 73 of the Finance Act could not have been issued to the appellant in view of the provisions of sub-section (3) of Section 73 of the Finance Act - Once the assessee has paid the service tax and interest before the issuance of the show cause notice, the provisions of Section 73(3) would apply and no show cause notice can be issued - the adjudicating authority and the Commissioner (Appeals) had drawn an artificial distinction between cases where a notice is issued on the basis of returns filed by an assessee and where a notice is issued on the basis of some investigation carried out by the Department, which is not legally sustainable. The provisions of sub-sections (3) and (4) of Section 73 of the Finance Act were clearly applicable in the present case - the impugned order is set aside and the appeal is allowed
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