Custom, Excise & Service Tax Tribunal
Honai Constructions vs Kolhapur on 1 August, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: ST/709/2010
[Arising out of Order-in-Appeal No: PII/AV/155/2010 dated 20th September 2010 passed by the Commissioner of Central Excise (Appeals), Pune II.]
For approval and signature:
Honble Shri C J Mathew, 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 CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
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?
:
Yes
Honai Constructions
Appellant
Vs
Commissioner of Central Excise
Kolhapur
Respondent
Appearance:
Shri R.B. Pardeshi, Advocate for the appellant Shri A.B. Kulgod, Asstt. Commissioner (AR) for the respondent CORAM:
Honble Shri C J Mathew, Member (Technical) Date of hearing: 01/08/2016 Date of decision: 01/08/2016 ORDER NO: ____________________________ This appeal is limited to the penalties arising from failure to discharge tax obligation as provider of commercial or industrial construction service for the period from 10th September 2004 to 30th September 2007 rendered to M/s Shirol Magaswargiya Sahakari Soot Girni Limited. The tax liability was determined as ? 17,56,977/-.
2. This matter had, on a previous occasion, been heard by the Tribunal and decided by order dated 3rd January 2014. Revenue carried the matter to the Honble High Court of Bombay on the ground that there was no discretion in the matter of penalty.
3. It is seen from the records that an amount of ?10 lakhs had been paid vide challan dated 23rd July 2007 and 29th August 2007. In appeal before the Commissioner of Central Excise (Appeals II), Pune, vide impugned order, set aside the penalty under section 76 of Finance Act, 1994, but retained penalty of ? 17,56,977/-, imposed by the adjudicating authority under section 78 of the Finance Act, 1994. The appellant contends that, in addition to the ? 10 lakhs deposited prior to issue of show cause notice, ` 7,56,977/- had been paid in March 2010 and in April 2010. A further amount ? 2,50,000/- was deposited along with interest by 8th September 2010.
4. It is the contention of the appellant that other than the factum of tax not having been paid, no evidence of suppression or mis-declaration has been evidenced or brought on record. On behalf of the appellant it was canvassed that they are contractors for excavation of canals in projects undertaken by the Irrigation department of Government of Maharashtra. This, being an exempted activity under the commercial or industrial construction service, they had no reason to believe that they were liable to tax. It is also their contention that the agreement was entered into in 2001-02 well before the tax introduced for the first time on the 10th September 2004. Learned Counsel for the appellant also submits that had the appellant been cognizant of taxability such amount would have been recovered from the client along with the rest of the consideration.
5. Learned Counsel for the appellant also relies upon the decisions of the Tribunal in Uma Polymers Limited v. Commissioner of Central Excise, Jaipur II [2013 (31) STR 742 (Tri.Del.)]; and Commissioner of Central Excise and Customs v. National Security Force [2014 (35) STR 303 (Guj.)] and Dhandayuthapani Canteen v. CESTATE [2015 (39) STR 386 (Mad.)].
6. Learned Authorised Representative contended that the first appellate authority cannot be faulted in its findings because the appellant is one who has been regularly engaged in commercial activities and cannot claim ignorance of the law relating to levy of service tax.
7. Having gone through the records of the case it is seen that the appellant entertained the belief that they were not liable to tax because the objectives were in relation to public service. Further, upon proceedings being initiated against them, the full amount of tax as well as interest were paid. There is also no reason to disbelieve the contention of the appellant that there was no intent to evade tax and this has been sufficiently established by voluntary payment of the tax and interest.
8. Considering the above circumstances, I find that this is a fit case for invoking section 80 of the Finance Act, 1994. Accordingly, penalty imposed under section 78 of the Finance Act, 1994 is set aside and the appeal allowed.
(Pronounced in Court) (C J Mathew) Member (Technical) */as 5 2