Custom, Excise & Service Tax Tribunal
M/S. Kjv Alloys Conductors Pvt. Ltd vs Cce, Hyderabad on 28 April, 2011
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench SMB
Court II
Date of Hearing:28/04/2011
Date of decision:28/04/2011
Application No.ST/St/84/11
Appeal No.ST/99/11
(Arising out of Order-in-Appeal No.25/2010(H-III)ST dt. 30/08/2010 passed by CCE,C&ST(Appeals), Hyderabad)
For approval and signature:
Honble Mr. P.Karthikeyan, Member(Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3.
Whether their Lordship wish to see the fair copy of the Order?
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. KJV Alloys Conductors Pvt. Ltd.
..Appellant(s)
Vs.
CCE, Hyderabad
Respondent(s)
Appearance Mr. R. Muralidhar, Advocate for the appellant.
Ms. Sabrina Cano, JDR for the Revenue.
Coram:
Honble Mr. P.Karthikeyan, Member(Technical) FINAL ORDER No._______________________2011 Per P.Karthikeyan The appellant M/s. KJV Alloys Conductors Pvt. Ltd. have filed this stay application for waiver of pre-deposit and stay of recovery of penalties imposed on it u/s 76 and 78 of the Finance Act, 1994 (the Act). After hearing the parties for some time, I find that the appeal itself can be disposed without a further hearing. Therefore, the appeal proper is taken up.
2. The facts of the case are that the appellant is a manufacturer of electrical conductors and is registered with the Central Excise department as an assessee. It received GTA service during 2006-07 , 2007-08 and 2008-09. Though the assessee was liable to pay service tax on the GTA service availed by it as the recipient of the said service, no service tax due on this account was paid nor the particulars reported in the monthly ST-3 returns. Adjudicating the allegation of violation of statutory formalities including payment of service tax due, the original authority confirmed demand of Rs.1,33,789/- and imposed penalty under Section 76 of the Act. Disposing the appeals filed by both the Department and assessee, the impugned order has been passed imposing penalty under Section 78 and sustaining the penalty imposed under Section 76 of the Act. The penalty under Section 76 of the Act is imposed for the period upto 09/05/2008 when the provisions were amended to bar imposition of penalty both under Section 76 and 78 simultaneously.
3. Reiterating the grounds taken in the appeal, the ld. Counsel for the appellants submits that penalties under both Sections 76 and 78 of the Act were not being simultaneously imposed even prior to 09/05/2008 and relies on a line of decisions. He submits that the assessee had already paid the tax confirmed along with interest and also paid 25% of the penalty imposed under Section 78 of the Act (pursuant to the impugned order). He prays that the penalty imposed under Section 76 of the Act may be waived in terms of the Section 80 and orders may be passed restricting the liability of the assessee under Section 78 to 25% of the tax demanded. In this connection he relies on the judgment of the Honble High Court of Delhi in the case of K.P. Pouches (P) Ltd. Vs. UOI [2008(228) ELT31 (Del.)]. In the said judgment, their lordships while dealing with similar provisions in Section 11AC of the Central Excise Act had held that it was sufficient for the appellant therein to pay 25% of the duty demanded if it had made good the short fall in paying 25% of the duty within 10 days of the order passed by the Honble High Court. In the said case, the lower authorities had not indicated in the orders the option available to the assessee that if the liabilities of duty, interest and penalty of 25% of the duty were paid within 30 days of the date of the communication of the order, that would be in full discharge of the penal liability of the assessee u/s 78 of the Act. He also relies on the decision of the Tribunal in the case of Kakda Steels Pvt. Ltd. Vs. CST, Bhopal [2010(20) STR 651 (Tri. Del.)], wherein the Tribunal held that the impugned order of the Commissioner(Appeals) waiving penalty imposed under Section 76 of the Act along with penalty under Section 78 of the Act could not be held to be unreasonable. The Tribunal observed that the Honble High Court of Kerala in the case of AC of Central Excise Vs. Krishna Poduval [2006(1) STR 185 (Ker.)] had dealt with the issue whether Section 76 and Section 78 could be invoked in respect of the same transaction. The High Court held that the lower appellate authority had powers to invoke Section 80 to waive any penalty. It is submitted that in view of the above reading of the provisions in the case of Krishna Poduval decision by the Kerala High Court, the Tribunal can waive penalty imposed on the assessee.
4. Ld. DR relies on the judgment of Honble High Court of Kerala in the case of Krishna Poduval (supra) in support of the plea that penalties could be imposed for same offence under both Sections 76 and 78 of the Act if the ingredients required for imposing such penalties existed. In the case on hand, penalties under both the two sections were justified as per the Commissioners(Appeals) order. She relies on the text of the Section 76 in support of the argument that penalty under Section 76 in addition to penalty under Section 78 was appropriate.
5. I have considered the rival submissions and examined the facts of the case. Vide the impugned order, the Commissioner(Appeals) found that the appellant was guilty of suppression of facts etc. with intent to evade payment of duty and was therefore liable to penalty under Section 78 of the Act. He reproduced the following text of the Section 76 and relied on the same to hold that penalty under Section 76 also had to be imposed on the appellant.
Any person, liable to pay service tax in accordance with the provisions of Section 68 or the rules made under this Chapter, who fails to pay such tax, shall pay, in addition to such tax and the interest on that tax amount in accordance with the provisions of Section 75, a penalty which shall not be less than two hundred rupees for every day during which such failure continues or at the rate of two per cent of such tax, per month, whichever is higher, starting with the first day after the due date till the date of actual payment of the outstanding amount of service tax:
Provided that the total amount of the penalty payable in terms of this Section shall not exceed the service tax payable.
The Commissioner(Appeals) did not find sufficient cause to extend benefit of Section 80 as regards penalty under Section 76. I am not in a position to order waiver of either of the penalties in the light of the findings of the lower authority. Accordingly, penalty imposed under Section 76 is upheld. I also find that their lordships of the Kerala High Court had held in the Krishna Poduval case as follows:
11. .. .incidents of imposition of penalty are distinct and separate and even if the offences are committed in the course of same transaction or arises out of the same act, the penalty is imposable for ingredients of both the offences. There can be a situation where even without suppressing value of taxable service, the person liable to pay service tax fails to pay. Therefore, penalty can certainly be imposed on erring persons under both the above Sections, especially since the ingredients of the two offences are distinct and separate. . . ..
Their lordships were dealing with the issue whether penalties under both Sections 76 and 78 were imposable on an assessee in an appeal filed by the Asst. Commissioner of Central Excise, Cochin.
6. As for the penal liability under Section 78, there is no dispute that the assessee had discharged tax due along with interest before the original authority passed the adjudication order. It is also undisputed that neither of the lower authorities indicated the option available to the assessee to pay 25% of the penalty within 30 days of the receipt of the respective orders in complete discharge of penal liability provided under Section 78 of the Act. In the K.P. Pouches (P) Ltd. case deciding a similar case, Honble Delhi High Court held that it was enough for the appellant to pay 25% of the penalty in complete discharge of its penal liability under Section 78 of the Act if it paid the said amount within 30 days of the said judgment. The assessee had already paid tax and interest. I find that though the K.P. Pouches (P) Ltd. case dealt with Section 11AC of the Central Excise Act, the ratio of the decision is applicable also to service tax matters since Section 78 of the Finance Act is identically worded as Section 11AC of the Central Excise Act. I find that the assessee has already paid 25% of the penalty. It is ordered that the assessee will have no further liability to penalty under Section 78 of the Act in view of the judgment in the case of K.P. Pouches (P) Ltd. by the Honble High Court of Delhi. The appeal is thus allowed in part.
(Pronounced and dictated in open court) (P.KARTHIKEYAN) MEMBER (TECHNICAL) Nr 6