Madhu Mohan Damodhar ORDER
1. Brief facts are that the respondents are engaged in providing advertising services by displaying the advertisement of their clients on bus back panels, bus shelters etc., after obtaining permission from MTC, TNSTC and Southern Railway. They obtained service tax registration under the category of Advertising Agency Service. During the course of audit of the accounts of the respondents, for the period from October and November 2009, it was noticed that the respondents had short-paid service tax during the period from October 2008 to February 2009 and not paid service tax for the period July 2009 to October 2009. It was also noticed that respondent had declared lesser taxable value for the half-year ending return of 31.3.2009. Show cause notice was issued proposing to demand the short-paid service tax along with interest and for imposing penalties. After due process of law, the adjudicating authority confirmed the demand of Rs. 63,12,484/- raised in the show cause notice and appropriated the said amount already paid by the appellant along with interest and imposed penalty under section 76 of the Finance Act, 1994 along with penalty of Rs. 5,000/- under section 77 of the Act. The department has filed the present appeal against such order aggrieved for the failure to impose penalty under section 78, even though the same was proposed in the show cause notice.
2. The ld. AR Shri B. Balamurugan reiterated the grounds of appeal. He adverted to para 2.1 of the show cause notice and argued that the respondents in their ST-3 returns for the half-year ending 31.3.2009 declared the taxable value lesser than that was actually received by them. It was further noticed that they had not discharged service tax liability for the period July 2009 to October 2009. They had not paid the service tax within the prescribed dates for the period from September 2008 to October 2009 and had not paid appropriate interest for such belated payment. This would show that the respondent is guilty of suppression of facts with intention to evade payment of duty. The adjudicating authority has failed to take note of these facts of suppression and imposed penalty only under section 76 of the Finance Act, 1994. He prayed that the impugned order may be interfered with by imposing penalty under section 78 of the Act ibid.
3. None appeared for the respondent though notices were issued for hearing.
4. The matter is taken up for disposal after hearing the ld. AR and on perusal of records.
5. The grievance of the department is that the adjudicating authority failed to impose penalty under section 78 of the Finance Act. It is seen that the respondent has discharged the entire service tax liability along with interest before issuance of the show cause notice. Part of the amount was paid up by adjusting CENVAT credit. In para 8 of the impugned order the respondent has taken a plea that they defaulted in payment of service tax due to certain legal dispute between their clients. As per sub-section (3) of Section 73 when the assessee has paid up the service tax along with interest on its own ascertainment or being point out by the officers, no penalties are required to be imposed. In the present case, show cause notice was issued even though the appellant had paid up the entire service tax along with interest immediately on being point out by audit. The adjudicating authority has imposed penalty under section