Custom, Excise & Service Tax Tribunal
Yes vs Represented By : Shri Rahul Patel, C.A on 28 January, 2013
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad COURT-II Appeal No.ST/591/11 Arising out of OIA No.147/2011(STC)/K.ANPAZHAKAN/Commr.(A)/Ahd, dt.04.07.11 Passed by Commissioner of Service Tax (Appeals), Ahmedabad For approval and signature : Hon'ble Mr. M.V. Ravindran, Member (Judicial) 1 Whether Press Reporter 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 CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 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 Appellant (s) : M/s. Central Warehousing Corporation Represented by : Shri Rahul Patel, C.A. Respondent (s) : CST Ahmedabad
Represented by : Shri K.N. Joshi, A.R. CORAM :
Hon'ble Mr. M.V. Ravindran, Member (Judicial) Date of Hearing/Decision:28.01.13 ORDER No. _____________ /WZB/AHD/2013, dt.28.01.13 Per : Mr. M.V. Ravindran;
This appeal is filed against order in appeal No.147/2011(STC)/K.ANPAZHAKAN/Commr.(A)/Ahd, dt.04.07.11.
2. The facts of the case, in brief, are that the appellants are engaged in the providing taxable services under the category of Storage and Ware Housing Service, Cargo Handling Service, Transport of Goods by road, and Clearing Service and holding a service tax registration bearing No.AAACC1206DST007. During the course of reconciliation for the financial year 2007-08 and 2008-09 by the audit party, it was observed that the appellant had made short payment of service tax of Rs.1,53,581/- during the year 2007-08. On pointing out, the appellant agreed upon and made payment of Rs.1,54,587/- vide e-payment No.00635 dated 06.08.2009. But they had not paid interest as applicable. A show cause notice, therefore, was issued to the appellants on 28.01.10. The adjudicating authority has confirmed the demand of Rs.1,53,581/- under Section 73(1) of the Finance Act, 1994 as the said amount has already been paid he appropriated the same and also imposed penalty under Section 75, 76 and 78 of the Finance Act, 1994.
3. Aggrieved by such an order appellant preferred an appeal before the first appellate authority. The first appellate authority did not agree with the contentions raised by the appellant and upheld the order in original.
4. Ld. chartered accountant appearing on behalf of the appellant would submit that the appeal in this case is only against the penalty imposed under Section 76 of the Finance Act, 1994. It is his submission that the entire amount of the service tax liability and the interest thereof stands paid on 06.08.09 before the issuance of show cause notice. It is his submission that the show cause notice was issued on 28.01.10. It is his submission that the judgment of the Honble High Court of Karnataka in the case of Adecco Flexione Workforce Solutions Ltd. 2012 (26) STR 3 (Kar.), on the provisions of Section 73(3) of the Finance Act, 1994, will apply. He reads the provisions of Section 73(3) of the Finance Act, 1994.
5. Ld. Assistant Commissioner (A.R.) would submit that the appellant had not paid the interest as the adjudicating authority has very clearly recorded that interest was not paid by the appellant. If the interest is not paid, provisions of Section 73(3) will not apply and again the amount is paid by the assessee after being pointed out by the audit party.
6. I have considered the submissions made at length by both sides.
7. I find that the appellant herein had discharged the service tax liability of Rs.1,53,581/- along with the interest of Rs.31,521/- on being pointed out by the audit party that there is a short payment of service tax. The said short payment on service tax was explained before the lower authorities in a way that the said short payment has taken place only for the month of March 2008 and this short payment has taken place due to non receipt of details from their units situated all over Gujarat.
8. On careful consideration of the submissions made by both sides, I find that the provisions of Section 73(3) of the Finance Act, 1994 are read.
(3) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person chargeable with the service tax, or the person to whom such tax refund has erroneously been made, may pay the amount of such service tax, chargeable or erroneously refunded, on the basis of his own ascertainment thereof, or on the basis of tax ascertained by a Central Excise Officer before service of notice on him under sub-section (1) in respect of such service tax, and inform the 1[Central Excise Officer] of such payment in writing, who, on receipt of such information shall not serve any notice under sub-section (1) in respect of the amount so paid :
Provided that the 2[Central Excise Officer] may determine the amount of short payment of service tax or erroneously refunded service tax, if any, which in his opinion has not been paid by such person and, then, the 3[Central Excise Officer] shall proceed to recover such amount in the manner specified in this section, and the period of one year referred to in sub-section (1) shall be counted from the date of receipt of such information of payment.
Explanation. 4[(1)] For the removal of doubts, it is hereby declared that the interest under section 75 shall be payable on the amount paid by the person under this sub-section and also on the amount of short payment of service tax or erroneously refunded service tax, if any, as may be determined by the 5[Central Excise Officer], but for this sub-section.
6[Explanation (2)For the removal of doubts, it is hereby declared that no penalty under any of the provisions of this Act or the rules made there under shall be imposed in respect of payment of service-tax under this sub-section and interest thereon.]
9. I find that the above said provisions are so clear, in as much as, if short payment of tax is ascertained by the assessee on his own or being pointed out by a central excise officer and if he pays the said amount before the issuance of show cause notice along with interest, the provisions very clearly lay down that no show cause notice should be issued to the appellant. I find that in the case in hand, all the conditions of provisions of Section 73(3) of the Finance Act, 1994 stands complied with by the assessee.
10. I find that in an identical situation, Honble High Court of Karnataka in the case of Adecco Flexione Workforce Solutions Ltd. (supra) while disposing the appeals filed by the Revenue recorded as under:
[Judgment per : N. Kumar, J.]. - Both these appeals are preferred by the assessee challenging the order passed by the Tribunal as well as the Appellate Commissioner who have held that the assessee is not liable to pay any penalty under Section 76 of the Finance Act, 1994 and therefore, set aside the order passed by the lower authorities imposing penalty.
2.?Facts are not in dispute. The assessee has paid both the service tax and interest for delayed payments before issue of show cause notice under the Act. Sub-sec. (3) of Section 73 of the Finance Act, 1994 categorically states, after the payment of service tax and interest is made and the said information is furnished to the authorities, then the authorities shall not serve any notice under sub-sec. (1) in respect of the amount so paid. Therefore, authorities have no authority to initiate proceedings for recovery of penalty under Sec. 76 of the Act.
3.?Unfortunately the assessing authority as well as the appellate authority seem to think. If an assessee does not pay the tax within the stipulated time and regularly pays tax after the due date with interest. It is something which is not pardonable in law. Though the law does not say so, authorities working under the law seem to think otherwise and thus they are wasting that valuable time in proceeding against persons who are paying service tax with interest promptly. They are paid salary to act in accordance with law and to initiate proceedings against defaulters who have not paid service tax and interest in spite of service of notice calling upon them to make payment and certainly not to harass and initiate proceedings against persons who are paying tax with interest for delayed payment. It is high time, the authorities will change their attitude towards these tax payers, understanding the object with which this enactment is passed and also keep in mind the express provision as contained in sub-sec. (3) of Sec. 73. The Parliament has expressly stated that against persons who have paid tax with interest, no notice shall be served. If notices are issued contrary to the said Section, the person to be punished is the person who has issued notice and not the person to whom it is issued. We take that, in ignorance of law, the authorities are indulging in the extravaganza and wasting their precious time and also the time of the Tribunal and this Court. It is high time that the authorities shall issue appropriate directions to see that such tax payers are not harassed. If such instances are noticed by this Court hereafter, certainly it will be a case for taking proper action against those law breakers.
4.?In that view of the matter, we do not see any merit in these appeals. The appeals are dismissed.
5.?Mark a copy of this order to the Commissioner of Large Tax Payers Unit who is in charge of collection of service tax to issue proper circular to all the concerned authorities, not to contravene this provision, namely sub-section (3) of Section 73 of the Act.
11. In view of the foregoing on facts as well as on the law, I find that the appellant has made out a case for setting aside the impugned order to the extent of upholding the penalty on them.
12. Accordingly, the appeal to the extent which is challenged the imposition of penalty under Section 76 is allowed and the impugned order is set aside to that extent. Appeal is allowed in above terms.
(Dictated and pronounced in the Court) (M.V. Ravindran) Member (Judicial) .JK 5