Custom, Excise & Service Tax Tribunal
M/S Basai Steels & Power(P) Ltd vs The Commissioner on 22 January, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Bench Single Member Bench Court I Appeal No.ST/683/2012 (Arising out of Order-in-Appeal No.33/2011(H-IV)ST, dated 20-12-2011 passed by Commissioner of C&.CE(Appeals-II) Hyderabad) For approval and signature: Honble Ms. Sulekha Beevi, C.S. 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? 2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? M/s Basai Steels & Power(P) Ltd.. Hyderabad ..Appellant(s) Vs. The Commissioner. C,C.E&ST,Hyderabad-IV ..Respondent(s)
Appearance Shri M.S.Nagaraja, Advocate for the Appellant Shri T.J.S.Prabhakaran, AR for the Respondent Coram:
Honble Ms. Sulekha Beevi, Member(Judicial) Date of Hearing : 22/01/2016 Date of decision: 22/01/2016 FINAL ORDER No._______________________ [Order per: Sulekha Beevi, C.S.]
1. The appellants are aggrieved by the penalty imposed for delay in payment of service tax.
2. The appellant is a registered dealer dealing in goods Viz. MS Bars, Coils, Pipes, Sections, Sheet/plates etc. On scrutiny of records for the period 2004-05 to 2009-10, it was found that appellants had short paid service tax on freight charges/GTA services. Further that appellant had received commission on job work which attracts service tax under Business Auxiliary Service. On pointing out the short payment, the appellant discharged the entire service tax liability dues along with interest. A show cause notice was served invoking the extended period proposing to impose penalty under Section 76 and 78 of the Finance Act, 1994. After due process of law, the Original authority imposed penalty both under Section 76 and Section 78. A penalty of Rs.10,95,174/- for the period 2007-08, and Rs.4,89,930/- for the period 2008-09 to 2009-10 was imposed under Section 78 of the Finance Act, 1994. The Appellants filed appeal before the Commissioner(Appeals) who vide the order impugned herein modified the Order-in-Original by reducing the penalty imposed under Section 78 to Rs.3,96,276/- on condition that the reduced penalty and penalty under Section 76 are paid within 30 days of order. Being aggrieved, the appellants are before the Tribunal.
3. The learned counsel appearing for the appellant, Shri M.S.Nagaraja confined his arguments to the penalty imposed. He submitted that the appellant had paid the service tax along with interest immediately on pointing out by the department and even before issuance of show cause notice. He submitted that there was omission to pay only due to financial hardships. He also canvassed that the appellant has not received any commission on job work and that the demand under this category is erroneous. That the appellant had purchased and installed over head crane in the premises. The expenses shown are not for receiving any commission but that incurred for fabrication and installation required for operation of crane. Appellant has not provided any such taxable service of receiving commission as alleged. The show cause notice, Order-in-Original or the impugned order do not contain any evidence to show that appellants received the commission of Rs.11,70,097/- as commission agent. That therefore, in the true sense appellant has paid excess service tax of Rs.1,44,624/- on BAS. The amount was paid without any murmur, so as to avoid litigation and buy peace with department. But after payment of service tax, as determined by officers along with interest, the department has issued show cause notice, invoking extended period of limitation. That there is no willful suppression or mis-statement of facts. He relied on the judgments laid in CST. Bangalore Vs Master Kleen 2012(25)STR 439(Kar), CCE &ST, LTU, Bangalore Vs Addeco Flexione Workforce Solutions Ltd. 2012(26) STR, 3(Kar) and Sumitra Tools(P) Ltd Vs CST Mumbai-11, 2015(37) STR 644(Tri-Mum).
4. Against this, the learned AR Shri T.J.S.Prabhakaran contended that the appellant willfully suppressed the non-payment of service tax. If the department had not verified the records, the mischief would not have come to light. That the Show cause notice issued invoking extended period is proper and that the penalty imposed is reasonable.
5. I have heard the rival submissions. The learned counsel for appellant has confined the dispute to the penalty imposed, although he explained that there was no ground for raising demand under BAS category. It is not in dispute that the service tax along with interest was paid immediately on pointing out by the department. Thereafter, the Show cause notice has been issued after the prescribed period of time alleging suppression and proposing to impose penalty. Sub-section(3) of Section 73 of Finance Act, 1994, lays down that no notice shall be served if the service tax along with interest is paid and informed to the authorities. The issue is squarely covered by the judgments placed before me by the learned counsel for appellant. The observations made by the Honble High Court of Karnataka in the case of Addecco Flexione Workforce Solution Ltd., is worth reproduction here, which reads as under:
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 inspite 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 papers, 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.
6. Following the dictum laid in the judgments cited supra, I find that the penalties imposed is not legally sustainable. The same is liable to be set aside.
7. In the result, the impugned order is modified to the extent of setting aside all the penalties (penalty imposed under section 76 and 78) imposed without disturbing the confirmation of demand of service tax and interest thereon. The appeal is partly allowed in the above terms with consequential reliefs, if any.
(Pronounced in open court)
( SULEKHA BEEVI. C.S.)
MEMBER(JUDICIAL)
Dks
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