Customs, Excise and Gold Tribunal - Tamil Nadu
Trans (India) Shipping Pvt. Ltd. vs Commr. Of C. Ex. on 16 June, 2005
Equivalent citations: 2005(188)ELT445(TRI-CHENNAI), 2006[3]S.T.R.706
ORDER P.G. Chacko, Member (J)
1. The appellants are a Customs House Agent providing the taxable service of Clearing & Forwarding. They have been providing this service right from 1994. For the period October 1998 to April 2001, they delayed payment of service tax as well as filing of returns. The department issued a show cause notice dated 18-9-2002 proposing penalties under Sections 76 & 77 of the Finance Act, 1994. After receiving this notice, the party voluntarily paid the interest on the amount of delayed tax. They, however, in the reply to the show cause notice, stated to the effect that the delay in the payment of tax was occasioned by a "cash crisis". This explanation was not accepted by the adjudicating authority, which imposed penalties of Rs. 6,92,312/- (equal to the total amount of delayed tax) and Rs. 5,000/- (at the rate of Rs. 1,000/- per half-year for which return was not filed within the prescribed time limit) on the assessee under Sections 76 & 77 respectively. The party filed an appeal with the Commissioner (Appeals) but this appeal did not succeed. The order passed by ld. Commissioner (Appeals) reads thus :
"I find that there has been inordinate delay in filing service tax returns as well as payment of tax. The delayed payment has been recurrent in nature. Hence the Lower Authority's order is upheld and the appeal is rejected."
This order is under challenge in the present appeal.
2. Heard both sides. Ld. Counsel for the appellants submits that the above order is not a speaking order inasmuch as it has not taken into account the submissions made by the appellants with regard to the cause of the delay of payment of service tax. According to ld. Counsel, the case has to be remanded to the lower appellate authority for a speaking order. Adverting to the merits of the case, ld. Counsel submits that the delay of payment of tax was due to an insurmountable financial crisis evidenced by their Chartered Accountant's certificate dated 11-3-2003 available on record. This certificate says that "bad debts" totalling to over Rs. 52.00 lakhs for the period 1998-99 to 2001-02 were written off and that a further amount of over Rs. 14.00 lakhs has also been classified as unrecoverable debt. Ld. Counsel also points out that the appellants had raised this plea of financial crisis before the lower authorities but the same was not considered. It is the counsel's contention that the appellants should be exonerated from penal liabilities under Sections 76 & 77 on the above grounds in terms of Section 80 of the Finance Act, 1994. It is also pointed out that the lower authorities failed to exercise properly their discretion under Section 76 of the Act in the matter of determining the quantum of penalty to be imposed under this provision. In this connection reference is made to Final Order No. 997/04, dated 17-11-2004 (T)] passed by this Bench in Appeal No. S/29/2004. Ld. DR seeks to defend the impugned order by submitting that only the minimum penalty was imposed on the party under Section 76 and that the penalty imposed under Section 77 was what was fixed under that provision.
3. After giving careful consideration to the submissions, I find that there is no dispute of the delay of payment of service tax for the relevant period, nor any dispute of the extent of delay worked out by the original authority. Again, it is not in dispute that, if a penalty is worked out on this basis at the rate of Rs. 100/- per day of default, it would amount to Rs. 6,92,312/-. This is admittedly the minimum penalty imposable under Section 76 of the Finance Act, 1994. Hence there can be no grievance against the quantum of this penalty. For the period of dispute, the penalty which was imposable under Section 77 for failure to file service tax returns was Rs. 1,000/- per half-year. A return had to be filed within the stipulated period for every half-year and any default in this regard would invite a penalty of Rs. 1,000/-. Admittedly, the appellants committed default five times. Consequently, the lower authorities imposed a penalty of Rs. 5,000/- under Section 77 of the Finance Act, 1994. The quantum of penalty under Section, 77 being statutorily fixed, there was no discretion left to the quasi-judicial authorities to determine a lesser amount of penalty. The remaining question to be looked into is whether the appellants were eligible for the benefit of Section 80 of the Finance Act, 1994, which laid down that a service tax assessee could be exonerated from penalties imposable under Sections 76 & 77 where he proves that there was reasonable cause for the default in payment of service tax or in filing of returns, as the case may be. As regards the appellants' default in the matter of filing of service tax returns, there could be no plea of financial crisis as a reason for delayed filing of return. The question now is whether a plea of financial difficulties ("cash crisis" in this case) is a valid reason to be admitted under Section 80 of the Finance Act, 1994. In this commercial world, it is too late for anybody to say that a "cash crisis" is insurmountable. It also appears from the record that the appellants were solvent enough to write off 'bad debts' while continuing to do their business. Apparently, their financial difficulty was only in the matter of paying their dues to the exchequer. In the circumstances, their plea of 'cash crisis' cannot be accepted as a reasonable cause for exonerating them from the penal liability under Section 76 of the Finance Act, 1994. The order of this Bench cited by ld. Counsel is of no aid to the appellant's case. In the cited case, the penalty imposed on the party under Section 76 by the lower authority was reduced by this Bench. In that case, the penalty imposed by the lower authority was not the minimum prescribed under Section 76 unlike in the present case.
4. For the reasons noted above, the impugned order is sustained and this appeal is dismissed.
(Dictated and pronounced in open Court)