Custom, Excise & Service Tax Tribunal
M/S. Coral Crest Builders vs Cce, Coimbatore on 17 March, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
ST/01/2010
(Arising out of Order-in-Appeal No.58/2009 dated 30.09.2009, passed by the Commissioner of Central Excise (Appeals), Coimbatore).
For approval and signature
Honble Shri R. PERIASAMI, Technical Member
M/s. Coral Crest Builders : Appellant
Vs.
CCE, Coimbatore : Respondent
Appearance Shri P.S. Krishnan, Sr. Manager, for the appellant Shri K.P. Muralidharan, AC (AR), for the respondent CORAM Honble Shri R. PERIASAMI, Technical Member Date of Hearing/Decision: 17.03.2015 FINAL ORDER No. 40448 / 2015 The present appeal has been filed by the appellant against the impugned order No. 58/2009 dated 30.09.2009, only against the penalty imposed under Section 78 of the Finance Act.
2. The brief facts of the case are that the appellant rendered the taxable service under Construction of Residential Complexes and failed to register under service tax and failed pay service tax on the amount collected from their clients. Offence case was registered by Preventive Unit of Coimbatore Commissionerate and after completing investigation a show cause notice dated 27.02.2008 was issued to the appellant for demanding service tax of Rs.5,91,192/- for the period 01.04.06 to 31.12.06 not paid under Construction of Residential Complexes. Appellants collected the entire amount and failed to remit the service tax to the Govt. account. The adjudicating authority in his order dated 30.12.2008 confirmed the demand and also appropriated an amount of Rs. 5,99,954/- towards service tax and educational cess and interest and imposed penalty under Section 76, 77 and equal penalty under Section 78 of the Finance Act, 1994. Appellant preferred appeal before the Commissioner (Appeals) against waiver of penalties. In the impugned order, the Commissioner (Appeals) has partially allowed the appeal and set aside the penalty imposed under Sections 76 and 77 of the Finance Act by invoking Section 80 of the Act and upheld the demand and interest and penalty under Section 78 of the Finance Act.
3. Heard both sides.
4. Shri P.S. Krishnan, Sr. Manager of the Company appeared on behalf of the appellant submits on receipt of letter dated 20.07.2006 from the department they immediately took service tax registration and remitted the service tax long before issue of summons and show cause notice. He submits that the appellants are under bonafide belief that service tax is not payable and they never had any intention to evade tax. He pleaded for waiver of penalty under Section 78 of the Act. He relied upon the following case laws in support of his contention.
1. CCE, LTU, Bangalore Vs. ADECCO Flexione Work Force Solutions Ltd.
2012 (202) ELT 389 (S.C.)
2. Santhi Casting Works Vs. CCE, Coimbatore 2009 (15) STR 219 (Tri.-Chen.)
3. Shriram EPC Ltd. Vs. CST, Chennai 2014-VIL-28-CESTAT-CHE-ST
4. CCE, Nasik Vs. A.B. International 2007 (8) STR 81 (Tri.-Mum.)
5. On the other hand, Ld. AR for the Revenue reiterated the findings of the adjudicating authority and Commissioner (Appeals) and submits that the appellant has deliberately suppressed the facts of service tax already collected towards construction service. But for the detection by the Department the service tax evasion could not have been noticed as the appellants not taken any registration under service tax nor discharged any service tax. He further submits that the Commissioner (Appeals) has already waived the penalties under Section 76 & 77 under Section 80. He relied upon the following decisions of the Mumbai Bench in the case of Kedia Business Centre Vs. CCE, Mumbai 2009 (15) STR 550 (Tri.- Mum.) and Riya Travels & Tours (I) Pvt. Ltd. Vs. UOI 2011 (24) STR 544 (Bom.).
6. I have carefully examined the submissions of both sides. The present appeal is limited to only waiver of equivalent penalty imposed under Section 78 of the Act. It is the case where the appellants have already paid the entire demand along with interest and the same was appropriated in the OIO. The appellant contended that they have paid the entire duty and the interest before issue of show cause notice and pleaded for waiver of penalty. It is not the case of the appellants that they have voluntarily paid the service tax on their own. As rightly held by the adjudicating authority in his findings, since the appellants have not even registered with the department under service tax and not filing returns in spite of knowing fully well that the they had already collected the total amount from their clients. The appellants therefore failed to obtain registration and but for the detection by the Department thy could not have discharged service tax. The appellants cannot plead for innocence for invoking Section 80. There are number of Tribunals and High Courts decisions where Section 78 penalty/under Section 11AC penalty were upheld, where there is a deliberate suppression of the facts proved with an intention to evade service tax. Honble Tribunal in the case of Kedia Business Centre (supra), wherein the Tribunal by relying the Honble Apex Court and Honble High Courts orders upheld the penalty imposed under Section 78. The relevant portion is reproduced as under:-
2.?The learned counsel has mainly argued that, as the service tax was paid with interest prior to the date of issue of the show-cause notice, any penalty was not liable to be imposed on the appellant under any of the above provisions. In this connection, he has relied on the Bombay High Courts decision in CCE v. Gaurav Mercantiles Ltd. - 2005 (190) E.L.T. 11 (Bom.) and a plethora of orders by this Tribunal. The Honble High Court held that where the entire duty liability was discharged prior to issuance of show-cause notice, no penalty was to be imposed on the assessee under Section 11AC of the Central Excise Act. Some of the decisions of the Tribunal cited by the counsel are also to the same effect. A few decisions of the Tribunal are to the effect that any penalty under Sections 76/77/78 of the Finance Act, 1994 is not imposable on a service-provider who paid service tax prior to issue of show-cause notice. The learned SDR has opposed the above argument of the counsel, on the strength of the Honble Supreme Courts decision in UOI & Ors. v. Dharamendra Textile Processors & Ors. - 2008 (231) E.L.T. 3 (S.C.). He has also pointed out that the above argument of the learned counsel cannot be accepted, in view of the Supreme Courts order on Civil Appeal No. 6435 of 2008 [2009 (235) E.L.T. A87 (S.C.)] (CCE v. Monarch Pipes Ltd.). It is submitted that the civil appeal was allowed by the apex court on the basis of the courts earlier decision in Dharamendra Textile Processors case and accordingly any penalty under Section 11AC of the Central Excise Act or any interest on duty under Section 11AB of the Act was not avoidable on the ground that the amount of duty had been discharged before issuance of show-cause notice. I find that, in the case of Dharamendra Textile Processors (supra), the Honble Supreme Court held that penalty under Section 11AC of the Central Excise Act was mandatory. Following this ruling, the Court, in the case of Monarch Pipes Ltd., set aside the Tribunals order [2007 (208) E.L.T. 470 (Tri.-Bang.)], wherein it had been held that penalty under Section 11AC of the Central Excise Act was not imposable where the assessee had already paid duty before issuance of the show-cause notice. The final legal position is, therefore, that any penalty otherwise imposable under Section 11AC of the Act cannot be avoided on the ground that the duty amount was paid by the assessee prior to issuance of show-cause notice. I am of the considered view that this principle is applicable to the penalty under Section 78 of the Finance Act, 1994 inasmuch as both these provisions of law (Section 11AC of the Central Excise Act and Section 78 of the Finance Act, 1994) deal with penal liability of an assessee who has failed to discharge tax liability in comparable circumstances. However, I am not inclined to apply the above principle to the penalties under Section 76 and 77 of the Finance Act, 1994. Insofar as those penalties are concerned, some of the decisions cited by the learned counsel are found to be operating in favour of the appellant. In the case of Sieger Spintech Equipments Pvt. Ltd. v. CCE, Coimbatore - 2006 (3) S.T.R. 736 (Tri.-Chennai), the appellants had paid service tax before the issue of show-cause notice and, therefore, penalties imposed on them under Sections 76 and 77 were set aside. The penalty imposed under Section 76 of the Finance Act on the assessee was set aside in identical circumstances in the case of Warna Industries Ltd. v. CCE, Pune - 2006 (4) S.T.R. 535 (Tri.-Mumbai). A similar penalty was set aside in the case of Heera Metals Ltd. v. CST, Kolkata - 2006 (4) S.T.R. 540 (Tri.-Kolkata). There are also other decisions of the Tribunal to the above effect, amongst the records filed by the counsel. The above Tribunals decision squarely applicable to the facts of the present case as they failed to take registration and failed to discharge service tax and suppression of facts established beyond doubt and paid service tax olny after the case was detected. Accordingly, I do not find any discrimination in justification on the appellants plea for waiver of penalty imposed under Section 78. Taking into consideration that the LAA has already waived the penalties imposed under Section 76 & 77 of the Act, I do not find any infirmity in the impugned order in so far as upholding the penalty under Section 78. The impugned order is upheld and the appeal is rejected on the above terms.
(Operative part of the Order pronounced in the Open Court on 17.03.2015) (R. PERIASAMI) TECHNICAL MEMBER BB 1