Custom, Excise & Service Tax Tribunal
M/S Banswara Syntex Ltd vs Cce, Jaipur-Ii on 7 May, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
West Block No. 2, R.K. Puram, New Delhi 110 066.
Date of Hearing : 7.5.2015
Appeal No. ST/485/2009-CU(DB)
(Arising out of Order-in-Appeal No. 19(DK)ST/JPR-II/2009 dated 20.3.2009 passed by the Commissioner (Appeals), Customs & Central Excise, Jaipur)
For Approval & Signature :
Honble Mr. Justice G. Raghuram, President
Honble Mr. R.K. Singh, Member (Technical)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2.
Whether it would 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 Department Authorities?
M/s Banswara Syntex Ltd. Appellant
Vs.
CCE, Jaipur-II Respondent
Appearance:
Shri Mayank Garg, Advocate - for the Appellant
Shri B.B. Sharma, D.R. - for the Respondent
Coram : Honble Mr. Justice G. Raghuram, President
Honble Mr. R.K. Singh, Member (Technical)
F. Order No. 51788/2015
Per R.K. Singh :
Appeal has been filed against Order-in-Appeal No. 19(DK)ST/JPR-II/2009 dated 20.3.2009 in terms of which service tax demand of Rs.36,68,635/- for the period April, 2006 to March 2007 had been confirmed along with interest. Penalty under Sections 77 and 76 of the Finance Act, 1994 was also upheld although penalty under Section 78 ibid which was also imposed by the primary adjudicating authority, was set aside.
2. The appellant engaged the services of overseas commission agents to procure export orders for export of its manufactured products like cotton yarn, synthetic filament yarn, fabrics etc and paid commission. Initially they did not pay any service tax thereon believing that the service was not provided in India and therefore no service tax was payable on such commission. However, on 19.5.2007 it paid the entire amount of service tax of Rs.36,68,635/- from their Cenvat credit account. Subsequently, when the Show Cause Notice dated 13.2.2008 was issued inter alia on the ground that such service tax could not be paid out of Cenvat credit and had to be paid in cash, it paid the entire amount in cash vide challans Nos. 7 & 8 dated 19.6.2008 and 9 & 10 dated 21.6.2008.
3. The appellant has contended that initially it was under the belief that the service tax was not payable but subsequently before the issue of show cause notice it paid service tax out of Cenvat credit and it is a settled issue that such service tax can be paid out of Cenvat credit. Even so, to avoid dispute it paid the impugned service tax in cash also in the month of June 2008 which was before the issue of order-in-original dated 11.7.2008. In these circumstances no penalties need be imposed more so when whatever it paid was immediately available to it as Cenvat credit. There was no malafide in this regard as has been accepted by the Commissioner (Appeals).
4. The ld. DR, on the other hand, reiterated the contentions contained in the impugned order.
5 We have considered the contentions of both sides. That the service tax under reverse charge mechanism can be paid by way of utilisation of Cenvat credit has been settled by several judicial pronouncements like in the cases of M/s Kansara Modler Ltd. Vs. CCE 2013 (32) STR 209 (Tri.-Del.), CCE Vs. M/s Auro Spinning Mills 2011 (187) ECR 308 (HP) and Shri Rajasthan Syntex Ltd. Vs. CCE, Jaipur 2011 (24) STR 670 (Tri.-Del.). Further discussion on this point is needless in view of the fact that the impugned demand was later paid in cash also before the issuance of the primary adjudication order. In these circumstances, the only issue to be decided is regarding interest and penalties. In this regard we find that the Commissioner (Appeals) has clearly noted in the impugned order that there was no suppression of facts with intent to evade service tax and the appellant itself informed the department about the liability. Further, the service tax was paid out of the Cenvat credit which was lying with the appellant and it was paid before the issuance of show cause notice. The impugned service tax was paid in cash also before the issuance of adjudication order in order to avoid disputes. Thus the bonafides of the appellant are abundantly demonstrated. In these circumstances the appellant claim at it initially thought that service tax was not payable on commission as the service was received outside India, though untenable, cannot be held to be malafide. It is also to be noted that paying the impugned service tax was like taking the money from one pocket and simultaneously putting it back in the same pocket because whatever tax was paid by the appellant was immediately available to it as credit. In these circumstances, Section 80 ibid is clearly invokable for the purpose of setting aside penalty under Section 76 ibid. Levy of interest in these circumstances would also be misplaced. Further, Section 73(3) ibid reads as under:
73(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 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. As is evident, the appellant paid the impugned service tax before the issue of Show Cause Notice and there was no suppression on its part as held by Commissioner (Appeals). In these circumstances even the Show Cause Notice was not required to be issued, nay, could not been issued as per Section 73(3) ibid, in which case the question of penalty and interest would not have even arisen.
6. In view of the foregoing analysis, we allow the appeal.
(Justice G. Raghuram) President (R.K. Singh) Member (Technical) RM 5