Custom, Excise & Service Tax Tribunal
Canara Bank vs Commissioner Of Service Tax Bangalore on 7 December, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: ST/26072/2013-SM [Arising out of Order-in-Appeal No. 16/2013 dated 04/02/2013 passed by the Commissioner of Central Excise and Service Tax, LTU Bangalore] For approval and signature: HON'BLE SHRI ASHOK K. ARYA, TECHNICAL MEMBER 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? Yes 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes Canara Bank Executor, Trustee & Taxation Section, Head Office, BGSE Towers, 51, 1st Cross, J.C. Road, Bangalore 560 027 Karnataka Appellant(s) Versus Commissioner of Service Tax Bangalore 1st To 5th Floor, TTMC Building, Above BMTC Bus Stand, Domlur Bangalore 560 071 Karnataka Respondent(s)
Appearance:
Smt Lalitha Rameswaran, CA #643, 1st Main, 7th Block, II Phase, BSK III Stage, Bangalore 560 085 For the Appellant Shri Ajay Saxena, DR For the Respondent Date of Hearing: 07/12/2015 Date of Decision: 07/12/2015 CORAM:
HON'BLE SHRI ASHOK K. ARYA, TECHNICAL MEMBER Final Order No. 22138 / 2015 Per: ASHOK K. ARYA Heard both sides in detail.
2. The appellant viz. M/s. Canara Bank, a public sector bank has been charged with availment of irregular cenvat credit on various counts. The chart given by the appellant in the written submissions on page 1 is given below:
Sl. No. Nature of Irregularity Amount (in Rs.) 1 Credit availed in respect of tax paid u/s 66A before the payment of tax 14,67,499 2 Amounts which do not represent Service Tax Electricity Bills 7,17,364 3 Amounts which do not represent Service Tax - VAT 25,024 4 Amounts which do not represent Service Tax BWSSB Bills 1,675 5 Credit availed more than once on the same set of documents 6,85,310 Total 28,96,872
3. The appellant is pleading that the cenvat credit of Rs. 14,67,499/- (Rupees Fourteen Lakhs Sixty Seven Thousand Four Hundred and Ninety Nine only) mentioned at Sl. No. 1 in above table is in respect of input services received from abroad and service tax paid on reverse charge basis; in this regard service tax was paid in the month of November 2009 though by mistake they took the cenvat credit in the month of April 2009.
3.1. Regarding the amounts mentioned at Sl. No. 2, 3, 4 of the table above Rs. 7,17,364/- (Rupees Seven Lakhs Seventeen Thousand Three Hundred and Sixty Four only), Rs. 25,024/- (Rupees Twenty Five Thousand and Twenty Four only) and Rs. 1,675/- (Rupees One Thousand Six Hundred and Seventy Five only) taken as wrong cenvat credit; the appellant accepts the mistake and stated that the said amounts were reversed along with interest when it was pointed out by the audit. The learned CA Smt. Lalitha Rameswaran representing the appellant pleads that they are the public sector undertaking and they had no intention to wrongly take the cenvat credit against the electricity bills, payment of VAT etc.; it was a genuine mistake of their employees working in Cenvat department. She pleads that they deserve to be given benefit of non-imposition of penalty under the provisions of Section 80 of Finance Act 1994.
3.2. In respect of cenvat credit amount (at Sl. No. 5 of the table) of Rs. 6,85,310/- (Rupees Six Lakhs Eighty Five Thousand Three Hundred and Ten only) allegedly taken more than once on the same set of documents, the learned CA is pleading that they have seven documents against eight documents to prove correctness of the credit and the 8th document is not available but for this they have a board letter confirming the eligibility of taking cenvat credit by the appellant. He says that by examining these documents, it can be proved that they did not take cenvat credits twice on the same set of documents; therefore, this cenvat credit amount of Rs. 6,85,310/- (Rupees Six Lakhs Eighty Five Thousand Three Hundred and Ten only) they are rightly eligible to take.
3.3. The appellant is further arguing that Revenue has imposed a penalty of Rs. 14,67,499/- (Rupees Fourteen Lakhs Sixty Seven Thousand Four Hundred and Ninety Nine only) under Rule 15(1) of the Cenvat Credit Rules regarding the alleged wrong credit availed in respect of service tax paid for the input services received from abroad (on reverse charge basis in the month of November 2009), though credit was taken in the month of April 2009. This equivalent penalty of Rs. 14,67,499/- (Rupees Fourteen Lakhs Sixty Seven Thousand Four Hundred and Ninety Nine only) should be waived of when there was no intention on their part to wrongly avail this credit and they reversed the same as soon as it was pointed out to them and they are willing to pay interest for the period between April 2009 to November 2009, a differential time period when the service tax was paid and when cenvat credit was taken.
4. Learned AR Shri Ajay Saxena appearing for the Revenue argues that the appellant wrongly took cenvat credit even on the electricity bills, on the payment of VAT, and water charges etc though they reversed the same along with interest. Further for the period of about seven months there was availment of wrong cenvat credit to the tune of Rs. 14,67,499/- (Rupees Fourteen Lakhs Sixty Seven Thousand Four Hundred and Ninety Nine only) against which the appellant has not paid interest even till now; therefore, the appellant does not seem to deserve any leniency regarding imposition of penalty.
5. After considering the full facts on record and the submissions of both sides it is clear that for the period between April 2009 to November 2009 the appellant had taken wrong cenvat credit in their account for which the liability of interest for the said period on the cenvat amount wrongly taken/claimed becomes payable under provisions of Rule 15(1) of Cenvat Credit Rules 2004 read with provisions of Section 75 of Finance Act, 1994 and deserve to be confirmed.
6. Regarding imposition of penalty of Rs. 14,67,499/- (Rupees Fourteen Lakhs Sixty Seven Thousand Four Hundred and Ninety Nine only) imposed under Rule 15(1) of Cenvat Credit Rules for the above wrongly taken cenvat credit, the facts indicate that for taking the cenvat credit there was no intention of the appellant to take it when it was not due. In fact it had become due to them, when they had paid the service tax in the month of November 2009; the said lapse has been explained by the appellant saying that the said services were received from abroad in their Mumbai office and statements using such services come to their centralized office in Bangalore. Sometimes such unintentional mis-happenings/mistakes do take place for which the appellant is not to be punished by imposing the penalties. The appellant has also cited in defense the Honble Supreme Courts decision in the case of Hindustan Steel Ltd. Vs. State of Orissa [1978 (2) E.L.T. (J159) (SC)] saying that in case of unintentional lapse imposition of penalty is not justified.
7. Considering the facts on record and the decision of the Honble Supreme Court in the case of Hindustan Steel Ltd. Vs. State of Orissa (supra) and the provisions of Section 80(1) of Finance Act 1994 (as they existed then) penalty of Rs. 14,67,499/- (Rupees Fourteen Lakhs Sixty Seven Thousand Four Hundred and Ninety Nine only) imposed on the appellant under Rule 15(1) of Cenvat Credit Rules is hereby set aside. In this regard the following pronouncement of Honble Supreme Court in the case of Hindustan Steel Ltd. Vs. State of Orissa (supra) gives support to hold that above penalty of Rs. 14,67,499/- (Rupees Fourteen Lakhs Sixty Seven Thousand Four Hundred and Ninety Nine only) is not justified. The Honble Supreme Court inter alia has held as below:
An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. Those in charge of the affairs of the Company in failing to register the Company as a dealer acted in the honest and genuine belief that the Company was not a dealer. Granting that they erred, no case for imposing penalty was made out.
8. In case of cenvat credit which was availed to the tune of Rs. 6,85,310/- (Rupees Six Lakhs Eighty Five Thousand Three Hundred and Ten only) where the appellant has pleaded that they have all the documents (in seven cases) except in one case (where they have Boards letter) the matter is remanded to the original adjudicating authority with the direction that the appellant is given full opportunity of personal hearing and that of submission of necessary documents before taking decision in the case afresh and this matter is to be decided by the original adjudicating authority within 3 months of receipt of this order.
9. The appeal is decided in above terms.
(Order pronounced in open court) (ASHOK K. ARYA) TECHNICAL MEMBER iss