Customs, Excise and Gold Tribunal - Tamil Nadu
Dhandayuthapani Canteen vs Cce on 6 June, 2008
ORDER P.G. Chacko, Member (J)
1. After examining the records and hearing both sides, I am of the view that the appeal itself requires to be finally disposed of at this stage. Accordingly, after dispensing with predeposit, I proceed to deal with the appeal.
2. In adjudication of a show-cause notice, the original authority had confirmed demand of service tax of Rs. 2,60,225/- and education cess of Rs. 5,204/- totaling to Rs. 2,65,429/- against the appellant for the period 10.9.2004 to 30.6.2006 under the proviso to Section 73(1) of the Finance Act, 1994 and had imposed penalties of Rs. 10,000/-, Rs. 1,000/- and Rs. 10,000/- on them under Sections 76, 77 and 78 of the Act respectively. The authority had also confirmed demand of interest on tax against the party under Section 75. The order of adjudication was accepted by the party. However, it was not accepted in full by the department. In exercise of his revisional jurisdiction under Section 84 of the Finance Act, the Commissioner took up the matter and imposed higher penalties on the party under Sections 76 & 78 of the Act. The operative part of the Commissioner's order reads as under:
(i) I impose a penalty of Rs. 200/- per day on the noticee in respect of the period from 10.9.2004 to till the date of payment of service tax due, not exceeding the service tax payable under the provisions of Section 76 of Finance Act, 1994.
(ii) I appropriate the amount of Rs. 10,000/- already paid by the noticee as penalty under Section 76, and adjust towards the penalty imposed against Sl. No. (i).
(iii) I impose a penalty of Rs. 2,65,429/- (Rupees two lakh sixty five thousand four hundred and twenty nine only) on the noticee under Section 78 of the Finance Act, 1994.
(iv) I appropriate the amount of Rs. 10,000/- already paid by the noticee as penalty under Section 78, and adjust towards the penalty imposed under Sl. No. (iii) above.
3. The present appeal is against the above order of the revisional authority. The learned consultant for the applicant submits that the entire amount of service tax and education cess with interest was paid prior to issuance of the show-cause notice and that the penalties imposed on them by the original authority were also paid shortly after the order of adjudication was passed. It is further submitted that the tax liability of the appellant is not in dispute, but, during the material period, there was a doubt in the appellant's mind as to whether service tax was liable to be paid on the amounts collected by them from their customers. It is submitted that this was enough reason under Section 84 of the Act for not imposing penalty on the party under the other provisions. However, it is submitted, the appellant accepted the decision of the original authority under the said provisions (Sections 76, 77 and 78). The learned consultant also relies on certain decisions of the Tribunal in support of some of the above submissions. I have heard the learned SDR also, who, apart from reiterating the findings of the Commissioner, points out that the finding of "wilful suppression and concealment of value of taxable service", recorded by the original authority was also accepted by the party and therefore they can hardly resist the mandatory penalty imposed under Section 78 of the Act.
4. After considering the submissions, I have to accept the plea made by the learned SDR in relation to the penalty imposed on the appellant by the Commissioner under Section 78. The order of adjudication contains a clear finding to the effect that the assessee had wilfully suppressed and concealed the value of taxable service provided by them. This finding was accepted by the party inasmuch as they did not file any appeal against the said order. Wilful suppression is one of the ingredients of Section 78 ibid and, if it is established, the assessee invites action under Section 78 in full vigour. This would mean that penalty equal to tax (including cess) has to be imposed on the party, which was not done by the original authority, but rightly done by the revisional authority.
5. Insofar as the penalty of Rs. 1,000/- imposed on the party under Section 77 of the Act is concerned, there is no challenge in this appeal.
6. As regards the remaining penalty imposed under Section 76 of the Act, I note that the original authority invoked this provision to impose a penalty of Rs. 10,000/- on the assessee after recording a finding that they had wilfully evaded payment of service tax. This finding was also accepted by the party. Therefore, I am not in a position to accept the plea of doubt, bonafide belief etc. raised by the appellant in the present appeal. Where the finding of wilful evasion of service tax has been accepted, it cannot be said that the non-payment of tax was on account of doubt, bonafide belief etc. and, consequently, it cannot be held that reasonable cause was shown for such non-payment of tax, for the benefit of Section 80 of the Finance Act. The original authority imposed a penalty of Rs. 10,000/- on the assessee "in exercise of the powers under Section 80". Having found that no valid ground for the benefit of Section 80 was established by the assessee, I am unable to approve such exercise of power. The revisional authority has chosen to impose a penalty of Rs. 200/- per day from 10.9.2004 till the date of payment of service tax, not exceeding the actual amount of service tax. It appears that this penalty has been imposed without having regard to the fact that Section 76 of the Finance Act, 1994 was partly struck down by High Court. Unfortunately, neither side has cited the relevant judgment of the High Court. In the circumstances, I have no option but to remand to the revisional authority the question as to what amount of penalty is imposable on the assessee under Section 76 ibid. The case law cited by the consultant has also been examined. None of these decisions is applicable to the facts of the present case, which are different from those of the cited cases, viz.:
(i) Sre Venkateswara Hi-Tech Machinery v. CCE 2007 (6) STR 139 (Tri. - Chennai)
(ii) CCE v. Sunitha Shetty
(iii) Star Cable v. CCE 2007 (8) ELT 295 (Tri. - Del.)
(iv) Engineering Resources Group v. Commissioner of Service Tax 2007 (8) STR 297 (Tri. - Bang.)
(iv) ETA Engineering Ltd. v. CCE 2006 (3) STR 429 (Tri. - LB)
(v) Whitefield Motors Pvt. Ltd. v. Commissioner of Service Tax 2007 (8) STR 606 (Tri. - Bang.)
(vi) Moores Rowland Consulting Pvt. Ltd. v. CCE 2007 (6) STR 160 (Tri. - Mumbai)
(vii) Media Advertising and Marketing v. CCE 2008 (9) STR 129 (Tri.-Mumbai)
(ix) Commissioner of Service Tax v. Prompt and Smart Security 2008 (9) STR 237
(x) Opus Media and Entertainment v. CCE 2008 (9) STR 284 (Tri.-Del.)
(xi) Noida Catering Service v. CCE 2008 (9) STR 194 (Tri.-Del.)
7. In the result, the appeal is dismissed in relation to the penalty imposed on the appellant by the revisional authority under Section 78 of the Finance Act, 1994 and is allowed by way of remand as regards the penalty under Section 76 of the Act. The learned Commissioner shall pass fresh order on the question as to what amount of penalty is liable to be imposed on the assessee under Section 76 of the Finance Act, 1994. It goes without saying that, before doing so, the Commissioner shall give the assessee a reasonable opportunity of being heard.
(Dictated and pronounced in open court)