Custom, Excise & Service Tax Tribunal
Yes vs Represented By : Ms. Dimple Gohil, ... on 21 August, 2014
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad Appeal No. : ST/11519/2014 [Application No. ST/Stay/12439/2014] Arising out of : OIO No.SUR-EXCUS-001-COM-046-13-14 dt. 31.12.2013 Passed by : Commr. (Appeals) C.Excise. & Cus., Surat For approval and signature : Mr. M.V. Ravindran, Hon'ble Member (Judicial) Mr. H.K. Thakur, Honble Member (Technical) 1 Whether Press Reporter 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? 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? Yes Appellant (s) : M/s. Essar Construction Limited Represented by : Ms. Dimple Gohil, Advocate Respondent (s) : Commissioner of Central Excise & S.T., Surat
Represented by : Shri G.P. Thomas, A.R. CORAM :
Mr. M.V. Ravindran, Hon'ble Member (Judicial) Mr. H.K. Thakur, Honble Member (Technical) Date of Hearing / Decision : 21.08.2014 ORDER No. A/11527/2014 Dated 21.08.2014 Per : Mr. M.V. Ravindran;
When this stay petition was called out, after hearing both sides, we find that the appeal itself could be disposed of at this juncture as it lies in a narrow compass. Accordingly, after waiving the condition of pre-deposit of the amounts involved, we take up the appeal itself for disposal.
2. Learned counsel appearing on behalf of the appellant would draw our attention to the issue and submit that the appellant had belatedly paid the service tax liability along with interest. It is her submission that the said service tax liability was discharged on their own. She would submit that the show cause notice was issued for imposition of penalty under the provisions of Section 76 of the Finance Act, 1994 on the ground that there was a non-payment of service tax liability. She would submit that the judgment of the Honble High Court of Gujarat in the similar issue has held that there was no reason to impose penalty on the assessee, following the judgment of the Honble High Court of Karnataka in the case of Adecco Flexione Workforce Solution Limited - 2012 (26) STR 3 (Kar).
3. Learned departmental representative reiterates the findings of the lower authorities.
4. On consideration of the submissions made by both sides and perusal of the records, we find that the issue involved is regarding imposition of penalty on the appellant under Section 76 of the Finance Act, 1994 for belated payment of service tax liability.
5. It is undisputed that the appellant has discharged the service tax liability along with interest albeit belatedly and was done on his own. In our considered view, having discharged the service tax liability which is not modified by the lower authorities, the provisions of Section 73 (3) of the Finance Act, 1994 will come into play as there is no allegation in the show cause notice that there is an intention to evade payment of service tax liability. We find strong force in the contentions raised by the learned counsel that the judgment of the Honble High Court of Gujarat in the case of Tejas Agency - 2014-TIOL-1332-HC-AHM-ST would apply in the facts of this case. We reproduce the relevant paragraphs as under:-
2. There is only one issue involved namely that of deleting the penalty on the respondent assessee by the Tribunal, CIT (Appeals) had ruled partially in favour of the Tribunal upon which, the assessee had approached the Tribunal. The Tribunal deleted the penalty applying Section 73(3) of the Finance Act, 1994 and following the decision of the Karnataka High Court in the case of C.C.E. & S.T., LTU, Bangalore Vs. ADECCO Flexione Workforce Solutions Limited., reported in - 2012 (26) S.T.R. 3 (Kar.) = 2011-TIOL-635-HC-KAR-ST.
3. This was on the premise that admittedly the assessee had paid the tax even before issuance of show cause notice. In terms of Section 73 (3) of the Finance Act, 1994, he, therefore, contended that no penalty should be imposed. This contention was accepted by the Tribunal.
4. Counsel Shri Oza for the department, however, contended that the Tribunal overlooked the provision of Subsection (4) of Section 73 of the Finance Act, 1994, which provides that:
(4) Nothing contained in subsection (3) shall apply to a case where any service tax has not been levied or paid or has been short levied or short paid or erroneously refunded by reason of -
a) fraud; or
(b) collusion; or
(c) wilful mis-statement; or
(d) suppression of facts; or
(e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax.
5. It is true that as per Subsection (4), penalty may still attach if there is non-payment of Service Tax by reason of fraud, collusion, wilful mis-statement, suppression of facts or contravention of provisions of the statute with intent to evade payment of Service Tax. In the present case, the Tribunal noted that, ...Since the recipient company had claimed Cenvat credit on the service tax remitted by the assessee, eventually no liability was incurred by the service recipient and amount of service tax remitted by the assessee was also reimbursed by the recipient. Learned counsel would contend that in these circumstances there would be no reason for any wilful suppression of the liability nor contravention of provisions of the Act with an intent to evade tax, warranting invocation of provisions relating to penalty. Reliance is placed on decision of the Karnataka High Court in Adecco Flexione Workforce Solution Limited (supra) Karnataka and in CST, Banglore vs. Ahead Info Technologies India Pvt. Limited 2012 (260) STR J 25 (Kar). In these pronouncements, the Karnataka High Court enunciated the principle that where an assessee has paid both the service tax and interest before issuance of a show cause notice under the Act, subsection 3 of section 73 of the Act, prohibits initiation of proceedings for recovery of penalty.
6. When there is a finding of fact that this was not a case of non-payment of Service Tax with intent to evade the payment of the same, question of applying Subsection (4) of Section 73 of the Finance Act, 1994 and resultantly exclusion of application of Subsection (3) thereof, would not arise. The question of law otherwise raised by the Revenue would be gone into in a proper case involving the facts which may make Subsection (4) of Section 73 applicable.
6. In our considered view, the ratio as reproduced above is squarely on the issue and accordingly, respectfully following the same, we set-aside the impugned order and allow the appeal.
(Dictated and pronounced in the Court)
(H.K. Thakur) (M.V. Ravindran)
Member (Technical) Member (Judicial)
..KL
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