Custom, Excise & Service Tax Tribunal
Bhargava Constructions vs Lucknow on 23 August, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL
REGIONAL BENCH : ALLAHABAD
COURT No. I
APPEAL No. ST/53298/2015-CU[DB]
(Arising out of Order-in-Appeal No.166-ST/APPL-AGRA/LKO/2015
dated 27/04/2015 passed by Commissioner (Appeals), Customs, Central
Excise & Service Tax, Lucknow)
M/s Bhargava Constructions Appellant
Vs.
Commissioner (Appeals), Central Excise
& Service Tax, Lucknow Respondent
Appearance:
Shri Akhil Gupta (Advocate) for Appellant Shri Gyanendra Kumar Tripathi (Asstt. Commr.) AR for Respondent CORAM:
Hon'ble Mrs. Archana Wadhwa, Member (Judicial) Hon'ble Mr. Anil G. Shakkarwar, Member (Technical) Date of Hearing : 23/08/2018 Date of Decision : 23/08/2018 FINAL ORDER NO. - 72067/2018 Per: Archana Wadhwa After hearing both the sides, we find that the only challenge in the present appeal is to penalty of Rs.7,03,470/- imposed under Section 78 of the Finance Act and of Rs.5,000/- imposed under Section 77 of the 2 APPEAL No. ST/53298/2015-CU[DB] Act. It is further seen that Commissioner (Appeals) has set aside the penalty imposed by the Original Adjudicating Authority under Section 76. Further the Appellate Authority, while confirming the penalty under Section 78 has already given an option to the appellant to avail the opportunity to the reduced penalty of 25% the service tax if the same is deposited within a period of 30 days from the date of communication of the Appellate order. The appellant have not availed this option.
2. As per facts on record, the appellant is engaged in providing construction service as also "Erection, Commissioning & Installation Service" to M/s BPCL. For the said purpose they took the registration on 07th November, 2008. However, the appellant neither filed any ST-3 Returns nor paid service tax on the services supplied by them for the period 2008-09 onwards. It is seen that in between on 21/09/2010 they deposited an amount of service tax to the extent of Rs.1,70,681/- but no other service tax leviable on the consideration received by them from BPCL was deposited neither the same was intimated to the Revenue by way of filing of ST-3 returns.
3. The appellant's factory was visited by the officers on 12/02/2011, who on the scrutiny of the records, found 3 APPEAL No. ST/53298/2015-CU[DB] that the appellant have entered into a contract with BPCL providing services falling under the category of "Erection, Commissioning & Installation Service". They are registered with the department with effect from 07/11/2008 and in spite of the registration, they were neither filing ST-3 returns nor discharging their service tax liability.
In the light of the above, statement of various persons were recorded wherein it was deposed by them that said service tax was being not deposited on account of financial crunch inasmuch as they had not recovered the service tax amount separately from their client M/s BPCL and the entire contract was inclusive of all the tax amounts. After the visit of the officers, the appellant, on various dates in February, March and April, 2011 deposited the amounts, total amount Rs.7,03,470/-.
4. In the above background, proceedings were initiated against them proposing confirmation of service tax in respect of services provided by them to BPCL, as also proposing imposition of penalties. The said show cause notice was adjudicated by Additional Commissioner of Central Excise, Kanpur, who confirmed the demand to the extent of Rs.7,26,095/- and imposed penalty of an 4 APPEAL No. ST/53298/2015-CU[DB] identical amount in terms of Section 78 of the Finance Act, 1994. In addition, penalties under Section 76 and 77 were also imposed.
5. On appeal against the above order, Commissioner (Appeals) upheld the same but for the reduction in quantum of service tax amount to the extent of Rs.7,03,470/-. Consequently penalty under Section 78 was also reduced. He further upheld the imposition of penalty of Rs.5,000/- under Section 77 of the Act but set aside the penalty imposed under Section 76. He also extended an option to the appellant to deposit 25% of the penalty within a period of 30 days from the receipt of the order, in which case, the penalty shall get reduced to 25%. The said order of Commissioner (Appeals) is impugned before us.
6. The learned advocate appearing for the appellant submits that the appellant have deposited the entire service tax along with interest and is not challenging the same and the only challenge is to the imposition of penalty under Section 78 and 77 of the Act. He submits that during the relevant period, they were not depositing the service tax and were not filing ST-3 Returns on account of financial crunch being faced by them. He 5 APPEAL No. ST/53298/2015-CU[DB] submits that part of the service tax was deposited by them before the date of visit of the officers and the balance stands deposited after the visit. It is his contention that the entire tax having been deposited before the issuance of the show cause notice, the penalty should not have been imposed under Section 78 of the Finance Act.
7. Countering the arguments, Learned A.R. for Revenue Shri Gyanendra Kumar Tripathi submits that the appellant had obtained registration in the year 2008, which fact itself reflects that the appellant was aware of their liability to pay service tax. In spite of that the appellant did not deposit the service tax in respect of services provided by them to BPCL. The fact of non receipt of service tax as by the appellant from M/s BPCL would not be a relevant factor inasmuch as it was the responsibility of the appellant to deposit the tax. In such a scenario, imposition of penalty upon the appellant is justified.
8. After carefully considering the submission by both the sides and after going through the impugned order, we find that there is no dispute about the facts. The appellant got themselves registered under the service tax, 6 APPEAL No. ST/53298/2015-CU[DB] vide registration dated 07/11/2008. In spite of getting themselves registered, appellant did not file ST-3 returns nor deposited the service tax in question. The appellant's plea that the service tax was not being deposited on account of financial difficulties being faced by them cannot be appreciated inasmuch it was the legal obligation on the part of the assessee to deposit the service tax in time. At least minimum required was that appellant could have filing ST-3 returns reflecting upon their accepted liability to pay service tax. As such, we note that this is not a case of delayed payment or delayed deposit of service tax, but is a clear case of suppression of the facts of providing services to BPCL. In such a scenario, no fault can be found with the order of the Authorities below in imposing penalties upon the assessee. As such, we find no merits in the appellant's stand and accordingly appeal is rejected.
9. At this stage, learned advocate submits that penalty should be reduced to 25% of the total amounts inasmuch as the entire service tax stand deposited by the appellant. However, we find that in terms of the order of Commissioner (Appeals) such option have been granted to the appellant and does not stand exercised by them. The option having been granted by the Appellate 7 APPEAL No. ST/53298/2015-CU[DB] Authority to deposit the 25% penalties within a period of 30 days from the date of passing of impugned Order-in- Appeal, having not been exercised by the assessee, we are of the view that no further extension can be granted for exercise of said option.
10. The appeal is rejected in above terms.
(Dictated & Pronounced in Court)
Sd/- Sd/-
(Anil G. Shakkarwar) (Archana Wadhwa)
Member (Technical) Member (Judicial)
Lks