Customs, Excise and Gold Tribunal - Delhi
Cce vs Silver Oak Gardens Resort on 2 November, 2007
Equivalent citations: 2008[9]S.T.R.481, [2008]13STT64
ORDER
R.K. Abichandani, J. (President)
1. The Revenue challenges the order dated 15.4.2007 setting-aside the penalties imposed by the adjudicating authority on the respondent under Sections 76 and 78 of Chapter V of the Finance Act, 1994.
The appellant was engaged in providing services of mandap keeper. According to the Revenue, the services were provided in a surreptitious manner and bills of lesser amount than the actual amount charged were issued and there were unaccounted functions held in the resorts of the appellant. The adjudicating authority found that service tax of Rs. 1,66,222/- was tried to be willfully evaded The demand was, therefore, confirmed and the amount deposited was appropriated along with interest. Penalty of equal amount of Rs. 1,66,222/- was imposed under Section 76, and further penalty equal to twice the amount of service tax determined i.e. of Rs. 3,32,444/- was imposed under Section 78 of the Act on the respondent.
2. The order of the Commissioner (Appeals) setting-aside the appeal has been challenged by the Revenue on the ground that the decision of the Larger Bench in CCE Delhi v. Machino Montel Industries Ltd. was reversed by the High Court of Punjab and Haryana by its decision reported in 2006 (4) STR 177 and, therefore, the very basis on which the impugned order was made does not exist.
3. In the context of the provisions of Section 11AC which is similar to the provisions of Section 78 of the said Act, the Supreme Court has held in Zunjarrao Bhikaji Nagarkar v. Union of India that levy of penalty under Section 11AC was imperative and not discretionary and that the liability for payment of duty depends upon the findings on merits in respect of the three constituents of Section 11AC. The learned authorized representative for the department has reiterated the contentions raised in the memo of appeal.
4. On going through the impugned order and the record, it is clear that the Revenue has established that the respondent had suppressed the value of their taxable service rendered by way of issuing bills for lesser amount and not recording all the functions maintained by the respondent. The fact that many functions were not recorded was admitted and the amount of Rs. 2,65,200/-was deposited as service tax on 30.11.2004. All this could happen only after the preventive staff of the Central Excise Commissionerate visited the premises of the respondent and detected the breaches committed involving the said amount of service tax. Obviously, therefore, the provisions of Sections 76 and 78 were clearly attracted and unless any reasonable ground was made out under Section 80, penalty was required to be imposed. There was no reasonable ground for non-imposition of penalty made out by the respondent as contemplated by Section 80. In cases involving suppression and fraudulent behaviour, there could not be any reasonable cause for failure for waiving penalty by resorting to Section 80. Therefore, on merits there was no valid reason for setting-aside the penalties by resorting to Section 80.
5. The Commissioner (Appeals) has based his decision on the decision of the Larger Bench in Machino Montel Industries Ltd. which has been reversed by the High Court of Punjab and Haryana in Commissioner of Central Excise v. Machino Montel (I) Ltd. . In paragraph 7 of the judgment, the Hon'ble High Court held that, once the case is covered by the provisions of Section 11A mere deposit prior to issuance of show cause notice under Section 11A of the Central Excise Act, 1944 will not necessarily negate the situation mentioned therein. This would mean that if the duty is deposited prior to the issuance of the show cause notice, there would not be any automatic waiver of penalty.
6. It transpires from the record that, the respondent had suppressed the charges and also the number of functions held in their resorts. With this finding and there being no reasonable cause for failure to make payments, penalty under Section 78 was clearly warranted. The adjudicating authority had imposed penalty under both the provisions, namely Sections 76 and Section 78. Section 78 dealt with aggravated form of default wherein the guilty mind was involved. under Section 78, penalty twice the amount of service tax evaded could be imposed, while the minimum imposable was an amount equal to the service tax evaded. under Section 76, amount of service tax evaded has been imposed by way of penalty. Both these penalties imposed together appear somewhat harsh. The proper penalty, in the facts and circumstances, would be an amount equal to the tax evaded. The impugned order of the adjudicating authority is, therefore, restored with the modification that the penalty imposed under Section 78 will stand reduced to Rs. 1,66,220/-being the amount equal to the service tax evaded. No separate penalty is warranted under Section 76 of the Act in view of the penalty imposed under Section 78. Rest of the order-in-original stands confirmed. This appeal is, accordingly, allowed.
[Dictated and pronounced in the open Court]