Custom, Excise & Service Tax Tribunal
Pune I vs Elaars Pools Pte. Ltd on 30 January, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: ST/85003/2013
CROSS-OBJECTION NO: ST/CO-91021/2013
[Arising out of Order-in-Appeal No: PI/MMD/182/2012 dated 27/09/2012 passed by the Commissioner of Central Excise (Appeals), Pune I.]
For approval and signature:
Honble Shri Ramesh Nair, Member (Judicial)
1.
Whether Press Reporters 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?
:
Yes
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
Commissioner of Central Excise
Pune I
Appellant
Vs
Elaars Pools Pte. Ltd.
Respondent
Appearance:
Shri A.B. Kulgod, Assistant Commissioner (AR) for the appellant None for the respondent CORAM:
Honble Shri Ramesh Nair, Member (Judicial) Date of hearing: 30/01/2015 Date of decision: 30/01/2015 ORDER NO: ____________________________ The appeal of the Revenue is directed against Order-in-Appeal No: PI/MMD/182/2012 dated 27/09/2012 passed by the Commissioner of Central Excise (Appeals), Pune I wherein the Commissioner (Appeals) upheld the confirmation of demand of service tax amounting to ` 12,68,768/- and interest under Section 75. However, he set aside the penalty imposed on the appellant under Section 70 and 78 and accordingly modified the order-in-original No. PI/ADC/ST/23/2012 DATED 08/06/2012.
2. The facts of the case are that on an enquiry by the officers of Anti Evasion, Pune I Commissionerate, it was gathered that during 2007-08 and 2008-09 the respondent provided services of supply and fixing of swimming pool tiles at the Balewadi Stadium for Commonwealth Games through M/s. B.G. Shirke Construction Tech. Pvt. Ltd. and M/s. Ashwini Enterprises on which the respondent had not paid service tax treating the same as non-commercial premises and as such not taxable. Consequent to the above enquiry the respondent have paid the service tax. On further enquiry, it was observed that the respondent had provided the service of filteration and cleaning of PCMC owned swimming pool deck and toilet area. Service tax was not paid by the respondent claiming that the services had been provided to Government owned Corporation and not for commercial premises. In adjudication, a total service tax amount of ` 12,68,768/- was confirmed and an amount of ` 6,69,283/- already paid was appropriated. Apart from this confirmation the learned adjudicating authority demanded interest under Section 75, imposed penalty of ` 5,000/- under Section 70 and a penalty of ` 12,68,768/- under Section 78 of the Finance Act, 1994. Aggrieved by the said order, the respondent filed an appeal before the Commissioner (Appeals), who maintained the demand of service tax amounting to ` 12,68,768/-, however, penalties under Sections 70 and 78 were set aside. Being aggrieved, Revenue is before me.
3. The learned Assistant Commissioner (AR), Shri A.B. Kulgod appeared on behalf of Revenue. However, none appeared on behalf of the respondent.
4. Shri Kulgod, learned AR submits that the respondent has not disputed the tax liability and partly paid the same admittedly. In such circumstances, the penalty imposed by the adjudicating authority under Sections 70 and 78 should not have been set aside by the learned Commissioner (Appeals). He submits that the learned .Commissioner (Appeals) does not have power to set aside the penalty in the light of the Supreme Court judgment in the case of Union of India vs. Dharmendra Textile Processors 2008-TIOL-192-SC-LB.
5. I have carefully considered the submissions made by the learned AR and perused the records. In the present case, there is no quarrel on taxability of the service, confirmation of demand and admitted payment by the respondent. The only issue to be decided by me is whether, in the facts and circumstances of the case, penalties under Sections 70 and 78 should be imposed or otherwise. The learned Commissioner (Appeals) has set aside the said penalties giving a detailed finding in para 14 which is reproduced below:
14. However with respect of imposition of penalty imposed under Section 70 & 78 of the Act, I find that the appellants were under a bona fide impression that sports complexes, being owned by Government of Maharashtra is non commercial building. Also PCMC is not a commercial organization the service tax is exempted and that in the works order issued by the M/s Ashwini Enterprises, Mumbai and M/s B.G.Shirke it is clearly mentioned that service tax is nil, hence penalty under section 70 & 78 is not imposable. I find that the decisions on phrase "reasonable cause" and interpretations, cited by higher appellate forums are as follows;-
(a) Reasonable cause can be reasonably said to be a cause which prevents a man of average intelligence and ordinary prudence, acting under normal circumstances without negligence or inaction or want of bona fides - Azadi Bachao Andolan Vs. UOI (2001) 116 Taxman 249/252 ITR 471 (Delhi).
(b) 'Reasonable cause' as applied to human action is that which would constrain a person of average intelligence and ordinary prudence. It can be described as a probable cause. It means an honest belief founded upon the reasonable grounds, of the existence of a state of circumstances, which assuming them to be true, would reasonably lead any ordinary prudent and cautious man, placed in the position of the person concerned, to come to the conclusion that the same was the right thing to do Woodward Governors India (P) Ltd.., Vs. CIT-) 2001-118 Taxmann 433.
I further find that the crucial requirement of 'bonafide1 for the purposes of Section 80 ibid has been very well elucidated by the Hon'ble High Court of Delhi in the case of Bajaj Travels Ltd. Vs Commissioner of Service Tax (2012(25)STR 417(Del), The relevant portion of "the judgement is reproduced below;-
"However, the defence of the appellant is that this failure was due to reasonable cause and, therefore, Section 80 becomes applicable. A bare reading of this provision would show that the onus is upon the appellant to prove "reasonable cause" for this failure. The moot question is as to whether the appellant has been able to discharge this onus? Before we advert to this issue, it is necessary to understand the meaning which is to be assigned to expression "reasonable cause". It would mean, in common parlance a cause or ground which was not unreasonable. To put it otherwise, in the context of this case the appellant has to show that there was sufficient and proper reasons which occasioned the appellant to make short deposits of service tax than required under the provisions of the Act If the appellant can show that the manner in which he was making the deposits of the service tax was bona fide i.e., in good faith, it would amount to 'reasonable cause'. Bonafide implies in the absence of fraud or unfair dealing. The equivalent of this phrase is "honestly". The correct province of this phrase is, therefore, to qualify things or actions that have relation to the mind or motive of the individual. Chambers 20th Century Dictionary defines bona fide to mean 'in good faith : genuine'. The word 'genuine' means 'natural: not spurious; real; pure; sincere'. In Law Dictionary Mozley and Whitley define bona fide to mean 'good faith, without fraud or deceit'. Thus the term bonafide or genuinely refers to a state of mind. 14.1 I find that in the instant case, appellant was under the bonafide belief, albeit mistaken, that sports complexes, being owned by Government of Maharashtra is non commercial building, that PCMC is not a commercial organization hence the service tax is not applicable for the complex and that in the works order issued by the M/s Ashwini Enterprises, Mumbai and M/s B. G. Shirke it is clearly mentioned that service tax is nil.
14.2 I therefore hold that in this case the appellant was acting under normal circumstances without negligence or that he was constrained in meeting his service-tax liability on a honest or bonafide belief or conclusion that the same was the right thing to do. In the circumstances, I find merit in the plea of the appellants that the non-payment of service tax was on account of bonafide reasons and that there was reasonable cause for their failure to discharge their tax liability. In view of the above, I pass the following order:
6. From the above finding of the learned Commissioner (Appeals), I observe that the learned Commissioner (Appeals) has very consciously considered the facts of the case, interpreted the terms reasonable cause and came to the conclusion that there is a reasonable cause for the respondent in non-payment of service tax at the relevant time and, therefore, exercising the power vested in him, he set aside the penalties. As regards the reliance of the Revenue on the honble apex Court judgment in the case of Dharmendra Textile Processors (supra), it is relevant to the penalties imposed under Section 11AC of the Central Excise Act, 1944. However, in the present case, the penalties are under Sections 70 and 78 of the Finance Act, 1994. As regard these penalties there is a clear provision under Section 80 of the Finance Act, 1994 wherein the power is vested in the authority to consider the waiver of penalty on satisfaction of reasonable cause for non-payment of service tax. Therefore, the case law relied upon by the Revenue is of no help.
7. In view of the above discussion and taking into consideration the facts and circumstances of the case, I am of the view that there is no infirmity in the order of the learned Commissioner (Appeals) and the same does not require any interference. The impugned order is upheld.
8. Revenues appeal is dismissed. Cross-Objection filed by the respondent is also disposed of accordingly.
(Pronounced in Court) (Ramesh Nair) Member (Judicial) */as 7