Custom, Excise & Service Tax Tribunal
India Gateway Terminal Pvt. Ltd vs Commissioner Of Customs, Central ... on 14 March, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order No. 20402 / 2014 Application(s) Involved: ST/Stay/28098/2013 in ST/27734/2013-DB Appeal(s) Involved: ST/27734/2013-DB [Arising out of Order-in-Appeal No. 49/2013 dated 30/05/2013 passed by the Commissioner of Central Excise, Customs and Service Tax, Cochin] India Gateway Terminal Pvt. Ltd. Administration Building, ICTT, Vallarpadam SEZ, Mulavukadu Village, Ernakulam, Kochi - 682 502 Kerala Appellant(s) Versus Commissioner of Customs, Central Excise and Service Tax C.R Building I.S Press Road, Ernakulam Cochin - 682 018 Kerala Respondent(s)
Appearance:
Mr. Kuryan Thomas, Advocate Menon & Pai Advocates P.B. No.1911, I.S. Press Road, Ernakulam, Cochin For the Appellant Mr. A.K. Nigam, AR For the Respondent CORAM:
HON'BLE SHRI B.S.V. MURTHY, TECHNICAL MEMBER HON'BLE SHRI S.K. MOHANTY, JUDICIAL MEMBER Date of Hearing: 14/03/2014 Date of Decision: 14/03/2014 Order Per: B.S.V. MURTHY The issue involved is only penalty in this case and after hearing both the sides, we consider that the issue itself can be finally decided and therefore we waive the requirement of pre-deposit and take up the appeal itself for final decision.
2. During the verification of CENVAT credit details relating to the period April 2006 to September 2006 it was noticed that in respect of 3 invoices the appellants had taken credit twice based on the same documents resulting in excess availment and utilization of CENVAT credit of Rs. 17,12,376/-. On going through the records it was also found that during the period from May 2006 to October 2006, the closing balance in the CENVAT credit was nil except for the month of October 2006 was Rs. 1,687/-. According to the Revenue this showed that appellant had taken excess credit deliberately to tide over the difficulties they had in mobilizing money. After finding this out, letter was written by the Range Officer to the appellant on 11.04.2007 requesting the appellant to pay the amount with interest. However, the assessee in their letter dated 11.05.2007 wrote to the department that they had not taken excess credit at all and there was some typographical error and therefore the mistake had occurred. After this another letter was written to the appellant after contacting them over phone stating that they had taken the credit twice. Thereafter the appellant paid the amount of CENVAT credit with interest which means that the appellants admitted that they had taken credit twice. Thereafter proceedings were initiated on 30.07.2008 requiring the appellants as to why penalty under Section 76 of the Finance Act 1994 and Section 78 of the Finance Act 1994 should not be imposed on them. The proceedings have culminated in imposing the penalty under Section 78 amounting to Rs. 17,12,376/- against which the appellant is seeking waiver of pre-deposit and stay against recovery today.
3. Learned counsel draws our attention to the provisions of Section 73 (3) of Finance Act 1994 and submits that according to the provisions of this Section, once an assessee pays the entire amount of service tax and interest, show-cause notice cannot be issued thereafter. He also submits that in this case a show-cause notice was issued beyond one year after the payment of entire amount of service tax and interest and therefore the show-cause notice itself has to be held as invalid and unsustainable.
4. We have considered the submissions made by both the sides. Learned AR submits that this is a case wherein the appellant made a mistake and took the credit twice and only after it was pointed out they made the payment. In fact the reproduction of facts above by us were after considering the submissions made by the learned AR. For better appreciation, the provisions of Section 73(3) are reproduced below:
(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 :
Provided that the [Central Excise Officer] may determine the amount of short-payment of service tax or erroneously refunded service tax, if any, which in his opinion has not been paid by such person and, then, the [Central Excise Officer] shall proceed to recover such amount in the manner specified in this section, and the period of [eighteen months] referred to in sub-section (1) shall be counted from the date of receipt of such information of payment.
Explanation. [1] - For the removal of doubts, it is hereby declared that the interest under section 75 shall be payable on the amount paid by the person under this sub-section and also on the amount of short payment of service tax or erroneously refunded service tax, if any, as may be determined by the [Central Excise Officer], but for this sub-section.
Explanation 2. - For the removal of doubts, it is hereby declared that no penalty under any of the provisions of this Act or the rules made there under shall be imposed in respect of payment of service tax under this sub-section and interest thereon.
However according to sub-section 4 of Section 73 nothing contained in sub-section 3 shall apply to a case where any service tax has not been levied or paid or has been short levied or short paid. In this case because of the fact that the closing balance was nil or subsequently less than the amount but for the excess credit taken by the appellant, it has resulted in short payment of service tax over a period of 6 months, in fact, more than that. That being the position, the appellants case is covered by provisions of sub-section 4 and not by sub-section 3. If the submission of the learned counsel is accepted, it would amount to rendering the provisions of sub-section 4 irrelevant and redundant. Because once a person is in default and if he makes the payment of service tax and interest and subsequently the department finds that such payment had arisen because of miss-declaration or suppression, no action can be taken even if there is a deliberate intention to evade tax. The provisions of sub-section 4 is to ensure that just because someone pays the tax and interest, he does not escape from other liabilities which arise in the case of evasion of tax who have not followed the law. In this case the circumstances discussed would show clearly that appellants deliberately took excess credit. In this view of the matter, we are unable to consider the submission that once the amount is paid with interest, show-cause notice could not have been issued for imposition of penalty. In any case for imposition of penalty there is no specific time limit laid down in the law. This is another reason why we are not able to consider the submission made by the learned counsel.
5. Another fact that has to be taken into account is the provision in the law that when there is suppression of facts or misdeclaration etc. where extended period can be invoked, an assessee could pay service tax plus interest and 25% of the service tax towards penalty before issue of show-cause notice. This is an alternative which is provided in the law itself to allow assessees to correct the mistakes/omissions and escape penalty of 100% under Section 78 by making payment with interest and 25% of the service tax with interest before the issue of show-cause notice. That being the position if the issue like the one before us is allowed and if the submission is accepted, we would be rendering this provision which provides for payment of 25% of service tax towards penalty otiose.
6. In view of the above observation, we are unable to consider the submissions made by the learned counsel favourably and accordingly the appeal is rejected.
(Order dictated and pronounced in open court) (S.K. MOHANTY) JUDICIAL MEMBER (B.S.V. MURTHY) TECHNICAL MEMBER iss