Order Date – 21 July 2022

Facts – 

• The Appellant, M/s Interglobe Aviation Ltd, operates scheduled aircrafts for passengers and cargo.
• To acquire aircrafts on financial lease in the course of its business, the appellant borrowed money from foreign banks through a process known as External Commercial Borrowings (ECB). The overseas banks require foreign guarantors for the ECBs and the guarantors, in turn, charge various forms of fees for their services.
• On 10 March 2014, the Directorate General of Central Excise Intelligence pointed out that the appellant was liable to pay Service tax which was duly paid by the appellant along with interest. 
• A show cause notice was issued in this matter to the appellant on 2 June 2014 demanding the service tax with interest and proposing to impose penalties which was later upheld.
• Aggrieved by the impugned order, the appeal was being filed.

Issue – 

• Whether the appellant’s case covered by Section 73(3) or Section 73(4) of the Act?

Order – 

• The Tribunal observed that the officer can issue a notice only to recover the Service tax not levied, short levied, not paid etc. but in this case the service tax was already paid by the appellant along with interest and hence penalties are not correctly imposed.
• It was also observed that the notice can be issued u/s 73 within the normal period of limitation OR extended period of limitation of five years if the elements of fraud, collusion, willful misstatement or suppression of facts or contraventions with intent to evade which is not the case in the present matter. This power to issue the SCN is further limited by Section 73(3) which states that no show cause notice can be issued if the tax is paid before the notice is issued.
• In the absence of fraudulent elements, the appellant is not covered by Section 73(4) and is squarely covered by Section 73(3). The show cause notice should therefore not have been issued to the appellant.
• Therefore, the order was set aside and the appeal was allowed.