Custom, Excise & Service Tax Tribunal
M/S.Priya Home Study Pvt.Ltd vs Cce, Meerut-Ii on 19 April, 2011
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
DIVISION BENCH
Service Tax Appeal No.108 of 2008
(Arising out of Order-in-Appeal No.161 (GRM)ST/JPR-I/2006 dated 7.9.2007 passed by the CCE (A), Jaipur)
For approval and signature:
Honble Mrs.Archana Wadhawa, Member (Judicial)
Honble Mr.M.Veeraiyan Member (Technical)
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 the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No
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?
No
M/s.Priya Home Study Pvt.Ltd. Appellant
Vs.
CCE, Meerut-II Respondent
Present for the Appellant: Shri B.K.Sharma, Advocate Present for the Respondent: Shri B.L.Soni, SDR Coram:Honble Mrs.Archana Wadhawa, Member(Judicial) Honble Mr.M.Veeraiyan, Member (Technical) Date of Hearing/Decision: 19.04.2011 ORDER NO._______________ PER: ARCHANA WADHAWA After hearing both sides, we find that the service tax of Rs.34,51,446/- stands confirmed against the appellant under the category of commercial training and coaching services for the period from 1.7.2004 to 31.3.2006. In addition a penalty of identical amount stands imposed under section 78 of the Finance Act, 1994 alongwith penalties of Rs.100/- per day under section 76 and Rs.1,000/- under section 77 of the Finance Act, 1994. The service tax confirmed and penalty imposed by the Additional Commissioner stands upheld by the Commissioner (Appeals) and hence the present appeal.
2. Learned Advocate appearing for the appellant submits that he is not disputing the confirmation of service tax against them, which already stands paid by them alongwith interest even prior to issue of show cause notice. However, he submits that the challenge in the present appeal is only to imposition of penalty under sections 76, 77 & 78 of the Finance Act, 1994. He submits that the appellant is operating from a small place called Jhunjhunu in Rajasthan and they had recently started imparting education in computer operation etc. The said service was exempted from payment of service tax vide Notification No.9/2003 dated 20.6.2003. However, the said exemption withdrawn from 1.7.2003 and the computer education was made taxable to service tax with effect from the said date. He submits that the appellant was not aware of the above development as it is situated in a small district where there was no central excise office during the relevant period. They were never advised by anybody to get service registered and started paying service tax for the first time when the officers visited their premises on 6.2.2006. When they came to know about their liability to pay service tax, as a good citizen they immediately agreed to pay service tax right from 1.7.2004 onwards, even they had not collected the same from the students. He further submits that though the show cause notice was issued for the period from 1.7.2004 to 31.3.2006, the demand is partly barred by limitation but the appellant never choose to contest the same on the said ground and immediately deposit of the service tax alonagwith interest. He further submits that payment of service tax is quasi penal nature and the Revenue has not disclosed any reason to show any malafide on the part. In such circumstances, he submits that it is fit the case for invocation of provision under section 80 of the Finance Act, 1994 and prays for setting aside the penalty imposed upon the appellant under various sections.
4. Countering the above arguments, learned DR appearing for the Revenue submits that the appellant has never approached the department for registration or seeking advice. The fact of non payment of service tax came to the notice of the department only at the time of visit of the officers. This fact, according to the DR, reflects malafide on the part of the appellant. As such, he submits that it is not a case for invocation of provision of section 80.
5. After appreciating the submissions of both sides, we find that in terms of section 80, no penalty is to be imposed on the assessee for any failure referred to in the Act, if the assessee shows that there were reasonable causes for such failure. Such reasonable causes have to be covered from the facts and circumstances of a particular case and the conduct of the assessee. Admittedly the appellant is located in a very small desert area in Rajasthan and there was no Range or Division of Central Excise/Service Tax in that area. Further, the appellant had started coaching centre only a year back in that year. We also find that earlier the coaching centres were exempted from payment of service tax with effect from 1.7.2004. That being the initial period of levy of service tax, there was lot of confusion in the field and it can be safely concluded that there was no malafide on the part of the assessee. The appellant has deposited the entire amount of service tax alongwith interest out of their own pocket which reflects their bonafide. Mere failure on the part of the assessee to get themselves registered with Service Tax Department to pay service tax by itself cannot be considered to be a malafide on the part of the assessee. If the contention of the learned DR is accepted, then no case under section 80 can be granted relief.
6. In view of the foregoing discussions, we are of the view that non payment of service tax by the appellant is on reasonable cause thus meriting invocation of section 80. We accordingly set aside the penalty imposed under sections 76, 77 and 78 of the Finance Act, 1994. The service tax is confirmed as not contested. The appeal gets disposed of in the above terms.
(Pronounced in the open court) (ARCHANA WADHAWA) MEMBER (JUDICIAL) (M.VEERAIYAN) MEMBER (TECHNICAL) mk 5