Custom, Excise & Service Tax Tribunal
M/S Bhagwat Dnyanoba Chame vs Commissioner Of Central Excise & ... on 1 December, 2014
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. ST/661/12 (Arising out of Order-in-Appeal No. P-II/MMD/170/2012 dated 10.07.2012 passed by the Commissioner of Central Excise (Appeals) Pune-II.) For approval and signature: Honble Shri Anil Choudhary, Member (Judicial) =====================================================
1. Whether Press Reporters may be allowed to see : No
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 : Yes CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy : Seen
of the order?
4. Whether order is to be circulated to the Departmental : Yes
authorities?
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M/s Bhagwat Dnyanoba Chame
: Appellant
Versus
Commissioner of Central Excise & Service Tax, Kolhapur
: Respondent
Appearance
Shri A.V. Naik, Advocate
: For Appellant
Shri Ashok B. Kulgod, Asst. Commr. (A.R.)
: For Respondent
CORAM:
HONBLE SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL)
Date of Hearing : 01.12.2014 Date of Decision: 01.12.2014
ORDER NO.......................................................
Per: Anil Choudhary:
Appellant is a proprietary concern, engaged in construction & registered under Service Tax. For the period, January, 2010 to March, 2010, show-cause notice was issued dated 30.06.2011, pursuant to inspection/audit alleging that the appellant have failed to disclose gross receipts of construction Rs. 40,68,718/- upon which Service Tax payable was proposed at Rs. 4,19,077/-. As payment already made was Rs. 25,916/-, balance amount of Rs. 3,93,160/- was proposed to be collected, with interest of Rs. 23,385/-. Further as the amounts stood already paid on 14.09.2010, it was proposed to be appropriated. Penalty was also proposed under Section 76, 77, 78 and Rule 7C of Service Tax Rules.
2. The appellant contested the show-cause notice by filing detailed objection:-
We wish to bring to your kind notice that, the delay in payment of service tax was due to the reasons that there was vehicle accident and the assessee was under arrest. This has also resulted heavily on the finances of the assessee. This unfortunate factual position has resulted in huge financial losses. It may kindly be noted that the assessee is provider of Construction service on Labour charges basis under this service more than 90% of the gross receipts represent the salary of the workers. For continuing the works on hand he has to make the salary of the workers in time on preferential basis failing which the workers discontinue the work and ultimately the total work in hand will be lost and he is required to suffer heavy penalty as per agreement with the party, also the working funds will also be blocked by the party. As such it is requested that the factual position may kindly be considered with lenient view and penal proceedings initiated under the show cause notice may kindly be dropped.
Further we wish to bring to your kind notice that, the assessee is an illiterate person. He had education upto VIIth standard only in Marathi medium, copy of the school leaving certificate is enclosed herewith for your kind perusal. Under this circumstance it is injustice to allege that the assessee is knowledgeable and well versed with the Service Tax provisions. With his uneducated background, he is not in a position to assess and monitor the funds properly. This has resulted in delay in the payment of Service Tax and keep evidences of above happenings to produce in this adjudication proceedings. The factual position at the most may be submitted with the affidavit and declaration. This submission itself may be considered as true affidavit and evidential value may kindly be given. Further we wish to bring to your kind notice that, the assessee is engaged in the Construction activity of only one Work site i.e. My Home Constructions during the financial years 2008-09 and 2009-10. During the course of audit the statement of receipts of cheques and Service Tax liability was submitted to the audit party. While making the payments of Challans the assessee has made payments as per the statements received by M/s My Home Constructions and the audit party reworked the demand on the basis of cheque received and it may kindly be seen that, during the year 2008-09 assessee has paid excess Service Tax of Rs. 1,98,721/- and only during the last quarter there is short payment of Rs. 3,93,160/- which was immediately paid during the period of audit without considering the excess payment during the first year. 2.1 It was further stated there was no malafide intention. The mis-statement in return for the quarter occurred due to arrest of appellant for motor vehicle offence, resulting in dislocation of business, and lack of communication with his office, particularly accountant. As the audit started in April, 2010, appellant could not avail the opportunity to file revised return. Further in spite of there being excess payment of about Rs. two lacs in the previous financial year, the appellant deposited the tax allegedly short paid with interest on 14.09.2010, and intimated the Revenue. Under the circumstances appellant prayed for sympathetic consideration and dropping of show-cause notice.
2.2 The show-cause notice was adjudicated and the proposed demand was confirmed, as well tax paid was appropriated. Further penalty was imposed under Section 77 Rs. 1000/-, under Section 78 Rs. 7,86,320/- and Rs. 500/- under Rule 7C of Service Tax Rules.
2.3 Being aggrieved, the appellant preferred appeal before Commissioner (Appeals), who vide the impugned order dated 10.07.2012 was pleased to reject the appeal.
2.4 Being aggrieved the appellant is before this Tribunal, on amongst others, the following grounds:-
(A) Penalty have been imposed mechanically, without application of mind.
(B) The plausible cause of default or mis-statement, was adequately explained, not found untrue, benefit of Section 80 should have been allowed and penalties dropped.
(C) The fact of vehicle accident and the appellant remaining confined for treatment and also under judicial custody, not found untrue, penalties are fit to be set aside.
(D) The appellant during the period under dispute suffered metally, physically resulting in disruption in business and cash flow.
(E) In view of excess payment worked out by Audit for pre-financial-year of Rs. 1,98,721/-, adjustment for the same should have been allowed from proposed demand for 2009-10, resulting into un imposed penalty, and hardship.
(F) Further in view of recommendation in Audit report, that matter may be treated as closed, no show-cause notice was required to be issued.
2.5 The appellant also relies on the ruling of Hon'ble Karnataka High Court in the case of Commissioner of Service Tax Vs. C. Ahead Info Tech. India (P) Ltd. in Central Excise Appeal No. 100/2009, wherein upholding the order of Tribunal, the Hon'ble High Court held:
This appeal is by the Revenue challenging the order passed by the Tribunal, which set aside the imposition of penalty under Section 78 of the Financial Act, 1994.
2. It is not in dispute that the assessee has paid the entire Service Tax with interest before the issue of show-cause notice. Once the tax and interest is paid and duly intimated to the authorities, sub-section (3) of the Section 73 comes into operation, which mandates that the authorities shall not serve any notice under sub-section (1) in respect to the amount so paid and initiate proceedings to recovery any penalty.
In that view of the matter, the order passed by the Tribunal is in accordance with law. No substantial question of law is involved. Hence, appeal is dismissed.
3. The learned A.R. relies on the impugned order. Further states, it is a case of misdeclaration in the return. Accordingly, appeal is fit to be dismissed.
4. Heard both sides.
5. It is held there is reasonable cause for default. As the proposed tax was paid prior to issue of show-cause notice, with interest, penalty under Section 78 is set aside. Impugned order is silent as to how tax have been computed. No allowance for material portion, is made. Hence, remanded to the adjudicating authority to recompute, after making deduction for material component, as per Service Tax (Determination of value Rules), 2006. Appeal allowed by way of remand. It is also held that the appellant will be entitled to refund/adjustment of excess tax deposited for 2008-09, Rs. 1,98,721/-
(Dictated and pronounced in open Court) (Anil Choudhary) Member (Judicial) Sp 6