Custom, Excise & Service Tax Tribunal
M/S. Ravali Spinners Pvt. Ltd vs Cc, Ce & St, Guntur on 23 December, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Bench SMB
Court I
Appeal No. ST/27744/2013
(Arising out of Order-in-Appeal No. 43/2013 (G) ST dated 25.07.2013 passed by CC, CE & ST (Appeals), Guntur)
For approval and signature:
Honble Ms. Sulekha Beevi, C.S., Member(Judicial)
1.
Whether Press Reporters may be allowed to see 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 CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3.
Whether their Lordship wish to see the fair copy of the Order?
4.
Whether Order is to be circulated to the Departmental authorities?
M/s. Ravali Spinners Pvt. Ltd.,
..Appellant(s)
Vs.
CC, CE & ST, Guntur
..Respondent(s)
Appearance Shri. Ch. Venkateswara Rao, Advocate for the Appellant.
Shri. Arun Kumar, Deputy Commissioner (AR) for the Respondent.
Coram:
Honble Ms. Sulekha Beevi, C.S., Member (Judicial) Date of hearing: 13/12/2016 Date of decision: FINAL ORDER No._______________________ [Order per: Sulekha Beevi, C.S.] The above appeal is filed by appellant challenging the order passed by Commissioner (Appeals) who upheld the confirmation of service tax, interest and also the penalty imposed under Section 78 of Finance Act 1994, but however, set aside the penalty imposed under Section 76 of the Act.
2. The appellants are engaged in selling yarn to markets. On gathering intelligence that the appellants are not paying service tax on freight charges paid by them, the Department requested appellants to furnish the details. After repeated requests the appellants vide letter dated 22.10.2011 furnished the details of freight charges paid by them for the period 2006-07 to 2010-11. After taking into consideration the abatement available to appellants as per the notifications, the taxable value was worked out to Rs. 1,11,91,404/- and the tax liability was arrived at Rs. 11,87,373/- for the period from April 2007 to March 2011.
3. A Show Cause Notice was issued to the appellants proposing to demand service tax amount of Rs. 11,87,373/- along with interest and also proposing to impose penalty under Section 76, 77, 78 of Finance Act, 1994. The appellants paid an amount of Rs. 11,87,373/- towards service tax and Rs. 1,01,498/- towards interest and Rs. 6,000/- towards late fee. After due process of law the adjudicating authority confirmed the demand of Rs. 11,87,373/- along with interest and appropriated the payments made by the appellant. He also imposed penalty under Section 76, 77 and equal amount of penalty under Section 78 with an option to pay reduced penalty of 25% of penalty if service tax along with interest is paid within 30 days. The amount of Rs. 79, 7735/- already paid by the appellant towards penalty was appropriated to the penalty imposed under Section 78 of Finance Act, 1994.
4. Aggrieved by the order of the adjudicating authority, the appellants filed appeal before the Commissioner (Appeals). Vide the order impugned herein the Commissioner (Appeals) upheld the demand of service tax, interest and penalty imposed under Section 78. However, the penalty imposed under Section 76 was set aside. The appellants are now before the Tribunal against this order passed by Commissioner (Appeals).
5. On behalf of the appellant, the Ld. Counsel Shri. Ch. Venkateswara Rao, submitted that the appellant is not contesting the demand of service tax but is confining the challenge in the appeal on the penalty imposed only. He submitted that the appellant paid the entire demand of service tax to the tune of Rs. 11,87,373/- and interest even before the issuance of the Show Cause Notice. That therefore the equal amount of penalty imposed under Section 78 is highly harsh. He submitted that out of the entire demand an amount of Rs. 9,00,103/- was paid for the period April, 2009 to March, 2011 in time and appellant had filed ST-3 Returns also. The service tax for the period prior to this, i.e., 4/2005 to 3/2009 to the tune of Rs. 3,18,940/- was paid belatedly. The same was however paid and interest of Rs. 1,01,498/- was also paid along with late fee of Rs. 6000/-. The appellants also paid penalty to the tune of Rs. 79,735/- which is 25% of the belated amount of Rs. 3,18,940/-. He argued that the imposition of equal amount of penalty of Rs. 11,83,543/- is highly harsh.
6. On behalf of the Department, the Ld. AR, Shri. Arun Kumar, submitted that the equal amount of penalty imposed is legal and proper as the appellant is guilty of suppression of facts with intent to evade payment of service tax. The appellants although obtained registration with the service tax department on 26.02.2008 failed to discharge the tax liability. Only after repeated correspondence calling for information did the appellants submit the desired information and copies of the ledger accounts for verification. That this is nothing but willful suppression of facts with intent to evade payment of tax and the Show Cause Notice is issued invoking extended period under proviso to sub-section (1) of Section 73 of Finance Act, 1994 and therefore the imposition of equal amount of penalty is just and proper.
7. I have heard the submissions made by both sides. It is seen discussed in the impugned order as well as in the Show Cause Notice that the appellant though obtained service tax registration in 2008 did not discharge the service tax liability regularly. It is seen that for the period 4/2009 to 3/2011 the appellants paid the service tax and filed ST-3 Returns. But they have deliberately either shown lesser taxable values in their Returns or paid less tax. For example for the year 2009-10 , the actual liability of service tax is Rs. 2,38,088/- as per the annexure enclosed to their letter dated 21.05.2012. However, they have paid only Rs. 1,67,449/- as service tax which was done by lowering the taxable value and accordingly the ST-3 Return was filed. The remaining amount of service tax of Rs. 70,638/- was paid by them only on 08.11.2011 when the issue was under investigation by the Department. It is discussed in the order that detail appellant has adopted this method of showing reduced taxable value during the earlier periods also. The act of the appellant is definetly suppression of facts with intent to evade payment of tax. Therefore the Show Cause Notice issued invoking extended period as well as the equal amount of penalty imposed under Section 78 are in my opinion correct and proper. I do not find any grounds to take a linen view on the facts and evidence presented by this case. The appellant has also put forward a contention that an amount of Rs. 31,670/- was paid for an earlier period and that adjudicating authority has appropriated this amount also for which no Show Cause Notice was issued. On perusal of records the authorities below have taken this into consideration. The demand confirmed is only Rs. 11,87,377/-. The amount paid by appellant being Rs. 12,19,043/- only after deducting Rs. 31,670/-, the demand is seen confirmed. Therefore, this contention deserves to be brushed aside. Therefore, the impugned order is sustained, the appeal is dismissed.
(Pronounced in open court on .) SULEKHA BEEVI C.S. MEMBER (JUDICIAL) Lakshmi.
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