Custom, Excise & Service Tax Tribunal
M/S. United Udyog vs Commr. Of Central Excise, Haldia on 28 June, 2013
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EAST REGIONAL BENCH : KOLKATA
Service Tax Appeal No.-519/2011
(Arising out of the Order in Appeal No. 36/HAL/2011 dated-2/09/2011 passed by the Commissioner of Central Excise, (Appeals), Appeal-I, Kolkata)
For approval and signature of :
DR. I.P. LAL, HONBLE TECHNICAL MEMBER :
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1. Whether Press Reporters may be allowed to see :
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982 ?
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 Lordships wish to see the fair copy :
of the Order?
4. Whether Order is to be circulated to the Departmental :
Authorities
M/s. United Udyog
APPELLANT(S)
VERSUS
Commr. of Central Excise, Haldia
RESPONDENT(S)
APPEARANCE
Sri N.K.Chowdhury, Advocate
FOR APPELLANTS
Sri S. Chakraborty, A.C. (A.R.)
FOR THE RESPONDENTS
CORAM:
DR. I.P. LAL, HONBLE TECHNICAL MEMBER
DATE OF HEARING : 28.06.2013 Date of Pronouncement:
ORDER NoA-235/KOL/13
Per DR. I.P. LAL
This appeal is filed against Order-in-Appeal No. 36/HAL/2011 dated-2/09/2011 whereby Commissioner (Appeal) has allowed the appeal filed by the Revenue and imposed a penalty under Section 76 of the Finance Act, 1994.
2. Brief facts of the case are that there was delay in filing the Service Tax Returns and payment of Service Tax on few occasions during the period April 2006 to March, 2009 towards construction services and maintenance services. Show Cause Notices was issued asking the assessee to pay the interest amounting to Rs.2,43,087/- for delayed payment of Service Tax, imposition of penalty for such delays under Section 76 of the Finance Act, 1944 and imposition of penalty under Rule 7C of the said Rules for delayed submission of the ST-3 Return. Adjudicating Authority confirmed the interest and imposed penalty of Rs.10,000/- under Rule 7C of said Rules. He however dropped the penalty under Section 76 of the Act by exercising the powers vested in him under Section 80 of the said Act. Against this order, the Revenue filed an appeal to the Commissioner (Appeals), who held that penalty was imposable under Section 76 of the Act and that the benefit of Section 80 of the Finance Act, 1994 cannot be extended to the Appellant. Against this order of the Ld. Commr. (Appeal) this appeal is filed.
3. At the outset, the Ld. Advocate appearing for the appellant has submitted that as regards delay in filing the Return they have paid the penalty. It is however the contention that adjudicating authority waived the penalty under Section 76 of the Act, by exercising the powers vested in him under Section 80 of the said Act by appreciating that the delay in payment was due to financial crunch and that the same was paid before adjudication. Accordingly Commissioner(Appeals) cannot invoke his jurisdiction and impose penalty for the first time. Ld.Advocate placed his reliance on the judgement of the Honble High Court of Karnataka in case of Commr. of Service Tax, Bangalore Vs. Motor World-2012 (27) STR 225 (Karnataka) and in the case of Commr. of Central Excise, Bangalore-II Vs. Sunitha Shetty reported in 2004 (174) E.L.T. 313 (Karnataka). The Ld. Advocate has submitted that the appellant paid the entire amount of Service Tax before service of notice by him and therefore no penalty was imposable as held in the case of Patil Telesolutions Vs. Commr. of C. Ex., Nashik reported in 2012 (27) S.T.R. 265 (Tri.-Mumbai) and in case of C.C.E. & S.T., LTU, Bangalore Vs. ADECO Flexione Workforce Solutions Ltd. reported in 2012 (26) S.T.R. 3 (Karnataka).
4. As per contra Ld. A.R. appearing for the Revenue has submitted that for waiver of penalty financial crisis cannot be considered within the purview of expression Reasonable cause used under Section 80 of the Finance Act, 1994 as held in Inma International Security Academy Pvt. Ltd. Vs. CCE, Chennai 2006 (1) S.T.R. 289 (Tri.-Chennai) and in case of Shayna Construction Vs. Commr. of Central Excise, Rajkot reported in 2010 (262) E.L.T. 1006 (Tri.-Ahmd.). He stated that during 2006-2009, the appellant has defaulted in filing the return in time and payment of service tax on the due date on a number of occasions. In view of these facts, he justified the view taken by the Commissioner(Appeals).
5. Heard both the sides and perused the records. Issue involved is whether financial hardship is a reasonable cause for exercising the powers by the adjudicating authority under Section 80 of the Act. The Ld.Advocate has cited the case of Sunitha Shetty and Motor World (supra) in support of their claims that the discretion conferred on the adjudicating authority under Section 80 of the Act cannot be reviewed by the Commissioner(Appeals). I however find that the facts involved in the present Appeal is not same as in case of the judgements cited by the Appellant. On the other hand Ld.Commissioner (Appeals) has placed reliance on the case of Shyana Construction, (supra) wherein the Tribunal held that delay of 187 days in filing the return and delayed payment of service tax ranging from 194 to 286 days was explained by the appellant due to his frequent visits on account of his mothers illness and that after return the tax could not be paid on account of financial difficulty, tribunal held the benefit of the Section 80 of the Act cannot be extended to the appellant in as much as they were aware of their responsibility to file the return and deposit the tax in time. Similar view was taken by the Tribunal in case of Inma International Security Academy Pvt. Ltd. (supra). In view of the issue specifically covered by this Tribunals decision in case of Shyana Construction and Inma International Security Pvt.Ltd. (supra) I uphold the contention of the Ld.Commissioner(Appeals) that financial difficulty cannot be considered as reasonable cause for exercising the discretion provided under Section 80 for waiver of penalty under Section 76 by the adjudicating authority. Accordingly, the revisionary order passed by the Commissioner to file appeal against the said order cannot be faulted with. I also find that the appellant could not show that he could not pay the tax on account of bona fide mistakes or under the impression that tax was not payable due to interpretation, and therefore they could not show that there existed reasonable cause.
6. I find that Commissioner (Appeals) has not quantified the penalty to be paid. He has also not considered Appellants claims as to whether the appellant was eligible to the benefit of the provisions of Section 73(3) of the Act on the ground that they paid a substantial amount of service tax alongwith interest before issue of show cause notice. In these circumstances, I set aside the order of the lower authorities and remit the case back to the adjudicating authority to decide the case afresh on the above contention of the Appellant. The appellant is at liberty to place before the adjudicating authority necessary documents in support of their case. Needless to mention that adequate opportunity of hearing may be granted before deciding the case afresh.
(Pronounced in the Court on 5/8/2013) (DR. I.P.LAL) TECHNICAL MEMBER k.b/-
Service Tax Appeal No.-519/2011 5