Customs, Excise and Gold Tribunal - Delhi
Ajay Somani And Company vs Cce on 6 December, 2006
Equivalent citations: [2007]9STJ65(CESTAT-NEW DELHI), 2007[8]S.T.R.270, [2007]9STT195
ORDER M.V. Ravindran, Member (J)
1. This appeal is directed against review order dated 10/01/06.
2. The issue involved of this case is regarding the enhancement of penalty under Section 76 of the Finance Act, 1994 by the Commissioner as a revising authority. The appellant is a Chartered Accountant engaged in providing the services of chartered accountant services and during the period October to December 2001 and April to June 2002, delayed the payment of service-tax by almost 88 days in both the quarters. Show cause notice was issued to him for imposition of penalty on the delayed payment on the service tax as per the provisions of Section 76 of the Finance Act, 1994. Adjudicating authority imposed the penalty of Rs. 500/- on the appellant under Section 76 of the Finance Act, 1994. Appellant did not prefer any appeal against such order. The learned Commissioner as a revisionary authority issued show cause notice to the appellant indicating his intention to review the said order in original. Appellant did not appear before the revisionary authority nor did he file any written submission. The learned Commissioner after considering the evidence on records came to the conclusion that order in original imposing penalty of Rs. 500/- is to be revised for imposition of penalty as provided under Section 76 of the Finance Act, 1994. Hence this appeal.
3. Heard the learned DR and perused the records. Considered the written submissions filed by the appellant. The main contention of the appellant in the written submission as well as in the grounds of appeal is that the appellant being a new entrant into the Service Tax Act was not aware of his responsibilities of discharge of service tax within time. He also relied upon the decision of the Tribunal in the case of Smitha Shetty v. CCE, Bangalore as reported at and also on the decision of the Hon'ble Supreme Court in the case of Hindustan Steel v. State of Orissa as reported at for the proposition that the penalty should not be imposed unless the party either acted deliberately in defiance of the law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligations. It is seen from the records that the appellant had taken the service tax registration certificate in the year 2001 as a provider of chartered accountant services. The appellant did not deposit the service tax for the period October to December 2001 and April to June 2002. This would indicate that appellant had discharged the service tax liability for the period January to March 2001, though not very clear from the records. It is also seen from the records that the appellant had not challenged the order in original imposing of penalty under Section 76 of the Finance Act 1994. In the absence of any challenge to the said order in original the appellant has accepted the imposition of penalty under Section 76. If that be so, the provisions of Section 76 would apply in its entirety. The provisions of Section 76 indicate that penalty has to be imposed at the rate of Rs. 100/- per day till the default continued.
4. The Larger Bench of the Tribunal in the case of ETA Engineering Ltd. v. CCE, Chennai as reported at has held as under:
6. On careful consideration, we find that there are orders passed by the Tribunal on this issue where conflicting opinions have been expressed. In case of Harilal and Co. v. CCE, Mumbai-I , it was held that minimum penalty is Rs. 100/- for each day of delay. Same view was taken in CCE, Jaipur v. Milan Tent Palace 2000 (131) E.L.T. 274. There are contrary decision also as relied upon by the appellant.
On careful examination of the provisions of Section 76, which is as under:
76. Penalty for failure to collect or pay service tax - Any person, liable to pay service tax in accordance with the provisions of Section 68 or the rule made thereunder, who fails to pay such tax shall pay in addition to paying such tax, and interest on that tax in accordance with the provisions of Section 75, a penalty which shall not be less than one hundred rupees but which may extend to two hundred rupees for everyday during which such failure continues, so, however, that the penalty under this clause shall not exceed the amount of service tax that he failed to pay.
We find that in Section 76, there is no comma after one hundred rupees. Therefore, the word, 'for everyday during which such failure continues', quality the words 'not less than one hundred rupees, but which may extend to two hundred rupees.' If the intention of the legislature was to impose a penalty of only Rs. 100/- then there would have been a comma after the word, 'rupees one hundred'. We also find that at the relevant time under Section 77 which reads as under:
77. Penalty for failure to furnish prescribed return - If a person fails to furnish in due time the return which he is required to furnish under Sub-section (1) of Section 70 or by notice given under Sub-section (2) of that section, he shall pay, by way of penalty, a sum which shall not be less than one hundred rupees, but which may extend to two hundred rupees for every day during which the failure continues.
There is a comma after the word, 'one hundred rupees'. Therefore, the intention of legislature is quite clear that penalty of Rs. 100/- per day was required to be imposed in case of failure to pay the tax for everyday after the due date. Therefore, we are of the view that the correct interpretation is that the penalty shall not be less than 100/- per day but which may extend to Rs. 200/- for every day during which such failure continues.
5. It can be noticed from the above reproduced paragraph that the Larger Bench has clearly held that an amount of Rs. 100/- per day is the penalty which has to be imposed on the assessee for violation of not depositing the service tax in time.
6. In the current case before me, the appellant has already admitted the fact, having not challenged the order in original and hence penalty has to be imposed on the appellant as provided under Section 76.
7. Accordingly, in view of the facts and circumstances, as mentioned above, I do not find any merits in appeal filed by the appellant. The appeal is dismissed.
(Dictated and pronounced in the open court)