Custom, Excise & Service Tax Tribunal
M/S Gujarat Fluorochemicals Ltd vs Commissioner Of Central Excise & ... on 21 February, 2017
In The Customs, Excise & Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad ~~~~~ Appeal No : ST/140/2010 (Arising out of OIA-COMMR-A-/291/VDR-II/2009 dated 30/11/2009 passed by Commissioner (Appeals) of Central Excise and Customs- Vadodara) M/s Gujarat Fluorochemicals Ltd : Appellant (s) Vs Commissioner of Central Excise & Customs , Vadodara : Respondent (s)
Represented by:
For Appellant (s) : Shri Dhaval Shah, Advocate For Respondent (s): Shri Sameer Chitkara, Authorised Representative CORAM :
Dr. D. M. Misra, Hon'ble Member (Judicial) Date of Hearing: 09.02.2017 Date of Decision: 21/2/2017 ORDER No. A/10409/2017 Per : Dr. D. M. Misra This is an appeal filed against OIA No. COMMR-A-/291/VDR-II/2009 dated 30/11/2009 passed by the Commissioner (Appeals) of Central Excise and Customs- Vadodara.
2. Briefly stated the facts of the case are that the appellant during the relevant period i.e. March, 2007 received Banking & Financial Services from the overseas service provider and failed to discharge service tax as required under Provisions of Rule 2(1)(d)(iv) of the Service Tax Rules, 1994. On being pointed out by the department, they paid the entire amount of service tax of Rs.27,38,942/- alongwith interest on 20.11.2007. A show cause notice was issued to them on 31.01.2008 for appropriation of the said amount and proposal for penalty under Section 76 and 78 of the Finance Act, 1994. On adjudication, the demand with interest was confirmed and appropriated; besides penalty of equal amount imposed under Section 78 of the Finance Act, 1994. Aggrieved by the said order, the appellant filed an appeal before the Ld. Commissioner (Appeals), challenging the imposition of penalty under Section 78 of Finance Act, 1994. The Ld. Commissioner (Appeals) though upheld the imposition of penalty, but, the benefit to discharge 25% of the penalty imposed is extended subject to fulfilment of the conditions laid down under the said provision. Hence, the present appeal.
3. The Ld. Advocate Shri Dhaval Shah for the appellant has submitted that under a bonafide belief even though they have paid the value of the services received from the Oversees Service Provider in March 2007, service tax was not paid by the appellant under reverse charge mechanism in accordance with and as required under Rule 2 (1() (d) (iv) of Service Tax Rules, 1994. But, as soon as the said mistake was brought to their notice, within six months of the payment of the service tax, they have paid the entire service Tax amount alongwith interest on 20.11.2007. It is his contention that due to ongoing disputes and lack of clarity about applicability of service tax to recipient of services under reverse charge mechanism, the service tax could not be paid by them soon after receipt of the value services from the overseas service provider. In support, he has referred to the decision of the Honble Tribunal in the case of Bharat Forge Ltd. Vs. Commissioner of Central Excise, Pune-III [2016 942) STR 312 (Tri.-Mumbai)].
4. Per contra, the Ld. AR Shri Sameer Chitkara for the Revenue vehemently argued that there is no material on record by which the appellant could establish that they had a bonafide belief in not discharging the service tax required to be paid by them as recipient of service under Rule 2 (1) (d) (iv) of Service Tax Rules, 1994. In support of his contention, he referred to the judgement of this Tribunal in the case of ENPRO Oil (P) Ltd vs. Commissioner of Central Excise, Noida [2015 (38) STR 1038 (Tri.- Del.)].
5. In his rejoinder, the Ld. Advocate submitted that the facts involved in ENPRO OIL (P) Ltd.s case (supra) is different from the present case, inasmuch as, in the instant case, the service tax was paid within six months from the date of receipt of the services and the show cause notice was issued for appropriation of the demand.
6. Heard both sides and on perused the case records. The short question to be answered is: in the facts of the circumstances of the case, whether imposition of penalty under Section 78 of the Finance Act, 1994 has been rightly confirmed by the Ld. Commissioner (Appeals). Undisputedly the entire amount of service tax payable by the appellant on receipt of Banking & Financial Services from the overseas service provider has been discharged alongwith interest within six to seven months from the remittance made. No doubt the said amount was paid after correspondences with the Revenue, but, it cannot be said that the default in payment was not with an intention to suppress material facts with intent to evade payment of service tax. Also, the circumstances which tilts in favour of the Appellant is that there has been continuous litigation/disputes on the liability to discharge service tax liability on receipt of the services from overseas service provider. In these circumstances, I find that the judgement of this Tribunal in the case of M/s Bharat Forge Ltd, (supra) is applicable to the facts of the present case. Following the said decision, I am of the opinion that this is a fit case for invoking Section 80 of the Finance Act, 1994 and both the authorities below has not recorded any finding on the applicability of Section 80 of the Finance Act,1994 even though specifically the issue was raised before the authorities below.
7. In the result, the impugned order confirming imposition of penalty is set-aside and the appeal is allowed to this extent.
(Order pronounced on 21/02/2017 ) (D. M. Misra) Member (Judicial) G.Y. ??
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1Appeal No. ST/140/2010