Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs Tops Detectives And Security Services ... on 27 September, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Application(s) Involved: ST/CROSS/21193/2015 in ST/21408/2015-SM Appeal(s) Involved: ST/21408/2015-SM [Arising out of Order-in-Appeal No. BGM-EXCUS-000-BEL-ADC-APP-HAB-034-2015 dated 09/03/2015 passed by Commissioner of Central Excise, MYSORE (APPEALS) ] Commissioner of Central Excise, Customs and Service Tax Belgaum NO. 71, .CLUB ROAD, CENTRAL EXCISE BUILDING, BELGAUM, - 590001 KARNATAKA Appellant(s) Versus Tops Detectives And Security Services Ltd B C No 51, Camp BELAGAVI - 590001 KARNATAKA Respondent(s)
Appearance:
Mr. N. Jagadish, AR For the Appellant Mrs. N. S. Sandhya, Advocate For the Respondent Date of Hearing: 27/09/2017 Date of Decision: 27/09/2017 CORAM:
HON'BLE SHRI M.V.RAVINDRAN, JUDICIAL MEMBER Final Order No. 22311 / 2017 Per : M.V.RAVINDRAN This appeal is filed by the Revenue against Order-in-Appeal No. BGM-EXCUS-000-BEL-ADC-APP-HAB-034-2015 dated 09/03/2015.
2. Heard both sides and perused the records.
3. The Revenue is aggrieved by the impugned order on the ground that the first appellate authority has set aside the penalties imposed by the adjudicating authority under Section 76 of the Finance Act, 1994 as also Section 77(2) read with Rule 7C of Service Tax Rules without any justifiable reason. Learned DR brings to my notice the findings recorded by the first appellate authority to set aside the penalties imposed. It is his submission that the said findings are not correct inasmuch in respect of written off debts cannot be justifiable reason for setting aside the penalties imposed. As regards small issue of CENVAT credit of Rs.11,723/-, it is his submission that the said amount of Rs.11,723/- credit availed by the respondent was not justified by producing proper documents which are required for availing CENVAT credit.
4. Learned counsel draws my attention to the findings recorded by the first appellate authority in paragraph 13.2 and submit that the findings recorded are very clear inasmuch the respondent during the relevant period had written off bad debts to the tune of Rs.37 crores for the financial year 2007-08; due to recession, they had to create provision for bad debts and there was acute problem of cash flow; due to non-payment / delay in payment from the clients. It is her further submission that these grounds were considered for invoking provisions of Section 80 of the Finance Act, 1994.
5. On a careful consideration of the submissions made by both sides, on perusal of records, it transpires that the appellant had during the period in question November 2009 to March 2010 not discharged the service tax liability on the amount of consideration received by them from their clients; they have not filed the returns in time but subsequently had filed returns on belatedly on payment of fees for belatedly filing the returns. I find that the discharge of service tax liability of the entire amount, as per the table produced in the grounds of appeal by the Revenue was completed on 20.1.2012 almost a year later the services were rendered and billed. There is no dispute as to the fact that appellant had received the consideration and despite that they have not discharged the service tax liability. This reasonable/justifiable cause which has been accepted by the first appellate authority i.e., non-receipt of payment and written off bad debts, in my view cannot be a reasonable cause for setting aside the penalties imposed under Section 76 of the Finance Act, 1994 and to that extent, the impugned order needs to be set aside and the appeal of the Revenue needs to be allowed. Learned counsel submits that the quantification of the penalty imposed needs to be considered from the date of payments made as per the claim of the Revenue itself. I find this prayer is very reasonable and acceptable; accordingly, the matter is remitted back to the lower authorities to arrive at the correct quantification of penalty as per the provisions of Section 76 of the Finance Act, 1994.
5.1 As regards the other issue of penalty under Section 77, since the penalty imposed under Section 76 is upheld the penalty imposed under Section 77 also needs to be upheld.
5.2 The issue of availment of CENVAT credit of Rs.11,723/-without producing any documents, I find learned counsel has produced the documents on which CENVAT credit was availed and documents were produced before the first appellate authority also. On perusal of the said documents, I find that the CENVAT credit was availed of the service tax paid by the Telephone Service providers and the courier services and the address is of the respondent at Belgaum. In view of this, I find that the finding of the first appellate authority that the respondent is eligible to avail CENVAT credit needs to be accepted and to that extent, the appeal of the Revenue on this point is rejected. Consequently, the interest liability and the penalty on this amount is also set aside. The Cross Objection filed by the respondent also stands disposed of.
6. Appeal stands disposed of as indicated hereinabove.
(Order was dictated in Open Court on 27/09/2017) M.V.RAVINDRAN JUDICIAL MEMBER rv 5