Customs, Excise and Gold Tribunal - Bangalore
Smt. Smitha Shetty, Shri Tarlabalu ... vs Commissioner Of Central Excise on 27 June, 2003
Equivalent citations: 2006[3]S.T.R.133
JUDGMENT G.A. Brahmadeva, Member (J)
1. These are four appeals. Since the issue involved is common in all these appeals, they are taken together and are being disposed off by this common order.
2. a) In appeal No. ST/4/02, Show Cause Notice has been issued to the party to impose penalty in terms of Sec. 76 & 77 of the Finance Act, 1994 for the failure to furnish the ST-3 returns within the due dates. According to the Department, the assessee had failed to pay the service tax in time to the credit of the Central Government payable in respect of services rendered during the quarter ending 12/99 and 3/2000 by the 25th of the month immediately following the said quarter, was paid into the credit of the Central Government only on 04.04.2000 for the quarter ending December 1999, 04.07.2000 for the quarter ending March 2000.Therefore, there was a delay of 139 days while paying the Service Tax for the above said period and accordingly, the assessee had contravened the provisions of Sec. 68 (2) of the Finance Act, 1994. The Show Cause Notice has been adjudicated by the Deputy Commissioner of Central Excise, Bangalore-II and vide his order dtd. 14.5.2001, imposed penalty of Rs.250 and Rs.200 respectively in terms of Sec. 76 and 77of the Finance Act, 1994.
b) The order passed by the adjudicating authority was reviewed by the Commissioner in terms of Sec. 84 of the Finance Act, 1994 and as per the review order, the Commissioner has enhanced the penalty to Rs.12,000/- in terms of Sec. 76 of the Finance Act holding that the assessee is liable to pay the penalty at the rate of Rs. 100/- for everyday of the delay or the service tax amount whichever is less in terms of Sec. 76 of the Finance Act, 1994.
3. In appeal No. ST/6/02 of the Deputy Commissioner who adjudicated the matter has imposed a penalty of Rs. 500/- under Sec. 76 of the Finance Act as there was a delay in filing the service tax return. In the review proceedings, the Commissioner has enhanced it to Rs.25,050/-on the same grounds stated above.
4. Similarly, in Appeal No. ST/10/02, the Commissioner in the review proceedings has enhanced to Rs. 17,985/- under Sec. 76 of the Finance Act as against a penalty of Rs. 250/- imposed by the adjudicating authority.
5. Similarly, in appeal No. ST/15/02, the Commissioner in review proceedings has enhanced the penalty to Rs.13,275/- as against Rs.4500/- under Sec. 76 of the Finance Act, 1994. In addition to imposing penalty of Rs.300/- in terms of provisions to Sec.77of the Finance Act, 1994 for the delay in filing the Service Tax returns.
6. In all these cases, the Commissioner has reviewed on the ground that from the language used in the construction of the statute, there is no doubt from the Sec.76 of the Finance Act, 1994 stipulates certain minimum penalty incase there is an infraction of law. Such minimum penalty cannot be less than Rs.100/- per day of delay but may extend upto Rs.200/- per day. According to the Review authority, the said provision puts a ceiling on the maximum penalty imposable as the amount of service tax payable. The adjudicating authority has mis-read the provisions while imposing the penalty. Since the Legislature has not inserted pause by way of comma, after the words "rupees one hundred", 'per day' used after the words "rupees two hundred" shall apply to the words "rupees one hundred" also. Therefore, the right interpretation would be to read the statute as rupees one hundred per day to rupees two hundred per day _ rupees one hundred per day being the minimum penalty to rupees two hundred per day being the maximum. According to the Review Authority, the Adjudicating Authority having come to the conclusion there is an infraction of law on the part of the assessee, he ought to have imposed a penalty of Rs.100/-per day at least, subject however, to the tax amount if the former is more. But, anything less than that, amounts to exercising discretion, which does not have the sanction of law.
7. I have carefully considered the matter. The Department contention is the words 'everyday' appearing after 'rupees two hundred' qualify the expression' rupees one hundred' also. In other words, the Revenue's stand is that Sec. 76 prescribes the minimum penalty as 'rupees one hundred' for everyday and lays down the maximum limit of rupees two hundred per day. It was emphatically argued that since there was no comma after the words 'rupees one hundred' like in the case of Sec. 77, the phrase 'per day' used after the words 'rupees two hundred' shall apply to the words rupees one hundred also. Section 76 and 77 as it stood at the relevant point of time are as follows:-
"76. Penalty for failure to collect or pay service tax -Any person, liable to pay service tax in accordance with the provisions of Sec. 68 or the rules made there under, who fails to pay such tax shall pay in addition to paying such tax, and interest on that tax in accordance with the provisions of Sec. 75 , a penalty which shall not be less than one hundred rupees but which may extend to two hundred rupees for everyday during which such failure continues, so, however, that the penalty under this clause shall not exceed the amount of service tax that he failed to pay.
77. Penalty for failure to furnish prescribed return. If a person fails to furnish in due time the return which he is required to furnish under sub-section (1) of Sec.70 or by notice given under sub-section (2) of that section, he shall pay, by way of penalty, a sum which shall not be less than one hundred rupees, but which may extend to two hundred rupees for every day during which the failure continues. With reference to the Sec.77 of the Finance Act, Tribunal has already held the minimum penalty at Rs.100/- and not Rs.100/-per day. Even in the absence of comma after the words 'rupees one hundred' it cannot be presumed that Section prescribes minimum penalty of Rs.100/-per day. The section clearly says the sum shall not be less than Rs.100/- which may extend to Rs.200/- everyday during which such failure continues. Even in the absence of comma, it may be read as minimum penalty of Rs.100/- and maximum may be Rs.200/- for everyday. Even in the case of BL Company (supra), it was observed that in the absence of comma after Rs.200/- makes it clear that everyday is qualifying only Rs.200/- As rightly observed by the Bombay High Court in the case of Cine Super 8 Pvt. Ltd (supra) now, punctuation is only a minor element in construction of a statute, no doubt when a statute is carefully punctuated and there is doubt about its meaning weight should be given to the construction as observed by the Supreme Court in the case of Aswini Kumar Vs. Arabinda Bose (AIR 1952 (SC) 369) and M.K.Salpekar Vs. Sunil Kumar Shamsunder Chaudhari (AIR 1988 SC 1841). In the instant case, there is no ambiguity or doubt in arriving at the meaning of the wordings of the relevant section. On a plain reading of the Section, it can be understood that the Section has laid down minimum penalty of Rs.100/- and maximum penalty of Rs.200/- for every day delay. The ruling given by the Apex Court in the case of Hindustan Steel Vs. State of Orissa (Supra) is relevant in this context. It was held therein an order imposing penalty for failure to carry out the statutory obligation is the result of quasi-criminal proceedings and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contentious or dishonest or acted in conscious disregard of its obligation. Penalty will not also 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 the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose penalty will be justified in refusing to impose penalty, when there is a technical or judicial breach of the provisions of the Act or where the breach flows from a bonafide belief that the offender is not liable to act in the manner prescribed by the statute. Since the adjudicating authority has exercised discretion in imposing the penalty with reference to the facts of each case, there was no justification for the Review authority to enhance the penalty on the ground that Sec. 76 prescribes minimum penalty of Rs.100/- for every day. All these appeals are allowed accordingly.