Custom, Excise & Service Tax Tribunal
C.S.T.- Service Tax Delhi vs Pentagon Financial Consultants Pvt Ltd on 15 July, 2013
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI
Court No. IV
Appeal No. ST/56572/2013-ST[SM]
[Arising out of Order-in-Appeal No. 275/ST/DLH/2012 DATED 10.10.2012 passed by the Commissioner of Central Excise (A) Delhi-I]
Pronounced on: 15.07.2013
Date of Hearing: 26.04.2013
C.S.T.- Service Tax Delhi Appellant
Vs
Pentagon Financial Consultants Pvt Ltd. Respondent
Appearance:
Sh. Ravi Saraf & N.K. Rajguhia, CA for the Appellant Sh. V.P. Batra, DR for the Respondent Coram: Honble Sh. Manmohan Singh FINAL Order: 56956/2013 Per Manmohan Singh:
An appeal has been filed by the department against the order in appeal No. 275/ST/DLH/2012 dated 10.10.2012. Commissioner (appeal) has observed that service tax amounting to Rs.2,36,479/- was short paid by the appellant and that amount was confirmed as payable at Under Section 73 of the Finance Act 1994. The appellant took the plea that since service tax was paid on 23/04/2007 well before the issuing of Show Cause Notice on 4.3.2008 there should not have been imposition of any penalty. That is Rs.2,400/-. They also submitted that interest liability on the service tax Rs.2,36,478/- amounting to Rs.2,562/- (totaling to Rs.2,39,041) was also paid by them on 23.4.2007. However, there was no payment of interest of Rs.771/- for delayed payment of service tax of Rs.10,96,562/- till the date of issue of Show Cause Notice i.e. 4.3.2008.
2. Commissioner (Appeal) took the view that penalty Under Section 76 cannot be imposed where service tax have been deposited by the appellant before the issuance of Show Cause Notice. He dropped the penalty of Rs.2,36,478/- imposed by the adjudicating authority Under Section 76 of the Act.
3. Department being aggrieved of the commissioner (appeal) order for setting aside the penalty amount on the appellant Under Section 76 of the Finance Act 1994, did not consider his order legal and proper and decided to file appeal on the following ground.
a. Commissioner appeal has misinterpreted the relied upon case law passed by Houble CESTAT in the case of Nischint Engineering Consultant Pvt. Ltd Vs. Commr. Of C.Ex., Ahmedabad-2010 (19) S.T.R. 276 (Tri-Ahmd.) which inter-alia stated that show cause notice ought to have not been issued when tax paid with interest before issue of Show Cause Notice.
b. Similarly, the other case law on which the Honble CESTAT relied upon in the above cited case i.e. M/s Santhi Casting Works Vs Commissioner of C.Ex., Coimbatore- 2009 (15) S.T.R. 219 (Tri-Chennai) also speaks that Section 73(3) of the Finance act, 1994 providing for non-issue of Show Cause Notice when Service Tax is paid with interest voluntarily.
c. The CBECs Circular No. 137/167/2006-CX.4 Dated 03.10.2007 which was relied upon by the Honble CESTAT in the above referred case laws clearly supports the contention of the department wherein the provisions of Section 73 of the Finance Act, 1994 have been discussed. The relevant portion of the Section 73 is reproduced below:-
Provided further that where such person has paid service tax in full together with interest and penalty under sub-section (1A), the proceeding in respect of such person and other person to whom notices are served under sub-section (1) shall be deemed to concluded. d. Thus it is amply clear that in the present case, the party had only deposited the Service Tax demanded amounting to Rs. 2,36,478/-, but had not deposited the due interest thereon, hence, the Order-in-Appeal passed by the learned Commissioner (Appeals) setting aside the penalty imposed under Section 76 of the Finance Act, 1994 in not legal and proper.
4. Heard both sides, Learned department counsel reiterated the grounds of appeal which have been taken by the department while filing appeal against Order-in-Appeal passed by commissioner (appeal). He mainly contended that Honble Tribunal in Nischint Engineering Consultant Pvt. Ltd v/s CCE Ahmedabad 2010 (19) STR 276 Tribunal of Ahmedabad held that Section 73 of the Finance Act 1994 provided that when an assessee pays service tax and interest due before issue of Show Cause Notice, then penalty imposed on the appellant cannot be sustained. Ld. DR pointed out that in this case only service tax have been paid by the respondent before issue of Show Cause Notice. No interest was paid on service tax of Rs.2,36,478/-. Thus reliance on the Nischint Engineering Consultant Pvt. Ltd case is not correct. He also submitted that once this important ingredient is not fulfilled, the benefit of exemption of penalty cannot be given.
5. Mr. Ravi Saraf appearing on the behalf of the respondents submitted that it was observed by the respondent that service tax amounting of Rs.2,36,479/- was short deposited and that amount was deposited along with interest amount to Rs.2,562/-. He also submitted that interest of Rs.771/- on delayed payment of service tax during the period from 10/10/2006 to 31/03/2007 was paid later on 4.4.2008 as per calculation below:
MONTH INTEREST FOR
DELAYED PAYMENT
October, 06 Rs. 17/-
November, 06 Rs.38/-
December, 06 Rs.303/-
January, 07 Nil
February, 07 Nil
March, 07 Rs.413/-
TOTAL Rs.771/-
6. It is clear that interest of Rs.771/- was paid later on 4.4.2008 vide TRC challan after issue of Show Cause Notice.
7. I have gone though the facts of the case including Order-in-Original No. GSB/503/ST/09-10 Order-in-Appeal 275/ST/DLH/2012, ground of appeal filed by the revenue with their appeal No.ST/56572/13/SM and cross objections filed by the respondent.
8. Major issue for determination is whether Commissioner (appeal) is right in concluding that service tax along with interest has been paid prior to the a issue of Show Cause Notice along with some portion of interest despite the fact that there is also short payment of interest of Rs.771/- which has been deposited on 4.4.2008 after the issue of Show Cause Notice which was issued on 4.3.2008. In this regard, I have also seen CBECs Circular No. 137/167/2006-CX.4 Dated 03.10.2007 which was relied upon by the Honble CESTAT in the above referred case laws clearly supports the contention of the department wherein the provisions of Section 73 of the Finance Act, 1994 have been discussed. The relevant portion of the Section 73 is reproduced below:-
Provided further that where such person has paid service tax in full together with interest and penalty under sub-section (1A), the proceeding in respect of such person and other person to whom notices are served under sub-section (1) shall be deemed to concluded.
9. I have also gone though CESTAT order Nischint Engineering Consultant Pvt. Ltd which Commissioner (Appeal) has misinterpreted. Order clearly states that Show Cause Notice ought to have been issued after tax has been paid with interest.
10. I have examined this Show Cause Notice issued on 4.3.2008 and payment of service tax of Rs.2,36,479/- and interest of Rs.2,562/- which was paid on 23.4.2007 which was prior to the issue of Show Cause Notice. However, I have also examined that interest on delayed payment amounting to Rs.771/- was not paid before issue of Show Cause Notice (4.3.2008). It was actually paid on 4.4.2004 which was after the issue of Show Cause Notice. These facts clearly point out that Commissioner (Appeal) was not correct in dropping penalty of Rs.2,36,479/- as requirement of Section 73 was not fulfilled.
11. I also find no justification in dropping the penalty of Rs.2,400/- which has been imposed for delayed payment of Service tax under Section 76 of the Finance Act 1944.
12. In view of the above, I find that Commissioner (Appeals) order is not correct interpretation of CESTAT judgment and CBECs Circular No. 137/167/2006-CX.4 Dated 03.10.2006 CX-4 Dated 03/10/2007 and requires to be set aside.
13. In view of the facts and discussion above Appeal filed by revenue against Order-In-Appeal 275/ST/DLH/2012 Dated 10/10/2012 is accepted. Order of commissioner (Appeal) is set aside and Order-in-Original No. JSB/503/ST/09-10 dated 16/11/2010 is restored back.
(Pronounced on 15/07/2013) (Manmohan Singh) Member (Technical Satish ??
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