Customs, Excise and Gold Tribunal - Mumbai
Arc. Hemant S. Dugad vs Commissioner Of Central Excise on 16 October, 2007
Equivalent citations: 2008[9]S.T.R.405
ORDER Archana Wadhwa, Member (J)
1. The appellant is engaged in providing the services of architecture. They were registered with the Central Excise Department w.e.f. 17-9-2003. However, during the period October, 1998 to September, 2002 and October, 2002 to June, 2003, the appellant did not pay service tax totally amounting to Rs. 51,425/-. Accordingly various show cause notices were issued to him. The appellant deposited the service tax before the issuance of show cause notice along with interest of Rs. 16,249/-. Asst. Commissioner while adjudicating the show cause notices appropriated the service tax and interest so paid by the appellant. He further imposed penalty of Rs. 500/- under the provisions of Section 76 and of Rs. 500/- in terms of Section 77 of the Finance Act, 1994 for late deposit of tax and non-filing of returns. The said order of the Asst. Commissioner was reviewed by the Commissioner who enhanced the penalty of Rs. 500/- imposed under Section 76 to the amount of tax so confirmed. The said order is impugned before the Tribunal.
2. I have heard Sh. S.S. Burad, Advocate. Appearing for the appellant and Sh. Tarun Kr. Grovil, Jt. CDR appearing for the Revenue.
3. Commissioner while enhancing the penalty vide his impugned order has observed as under:
I find that the Adjudication Authority has not given any justification under Section 80 ibid, for imposition of lesser penalty under Section 76 ibid. Justification under Section 80, could have been given only on the basis of some reasonable cause for failure to pay service tax given by the assessee. Regarding the reliance on the decision of Chitrita Vimave v. CCE, I find that the payment of service tax was not made immediately after the vacation of the stay. Regarding their plea that no penalty should be imposed if tax is paid before issuance of show cause notice, I have perused the case law relied upon and I find that the important consideration in the case of CCE v. Cameral World is that, the payment of service tax and interest before issue of show cause notice is supported by the reasonable justification for delay in payment of service tax. Regarding their plea imposition of penalty is the discretion of the adjudicating authority, I find that the important consideration for reduction of penalty under Section 76, is that the Adjudicating Authority has to exercise discretion (to reduce penalty) on sound judicial principals, in the facts and circumstances of the case and in terms of Section 80. No such justification has been given by the Adjudicating Authority in the order while imposing a reduced penalty. It is to be further mentioned that the CESTAT in Order No. A/1520/C-IV/SMB/WZB/2006 & S/827/ C-IV/SNB/WZB/2006, dt. 30-8-2006 upheld the order-in-revision passed by the Commissioner of Central Excise & Customs, Nashik, in the case of Pushpak Publicity v. C.C.E. & C, Nasik, saying that the minimum penalty prescribed is not just Rs. 100/- but Rs. 100/- per day.
4. The Revenue has drawn my attention to the LB decision in case of ETA Engineering Ltd. . On the other hand the appellant have relief upon the Tribunal's decision in the case of Chitrita Vimave I find that M/s. ETA Engineering Ltd. decision is only on the point that the "Penalty which shall not be less than Rs. 100/-, which may extend to Rs. 200/- per every day during which such failure continues" means that the said section provides penalty of Rs. 100/- per day. However, the said decision is not in respect of the provisions of Section 80. On the other hand the Tribunal's decision in the case of M/s. Chitrita Vimave, which deales with the identical case of payment of service tax by an architect has observed as under:
3. The challenge in the appeal is only of the imposition of personal penalties of varied amounts imposed upon the appellants who are Architects by profession. As per facts on record, I find that the Service Tax was imposed on rendered Architects with effect from 16th October, 1998. Thereafter, the appellants got themselves registered with the Central Excise authorities. However, the Service Tax was not deposited by them for certain quarters and ST-3 returns was not filed for the said period. The appellants' defence is that the provisions of Service Tax in respect of Architects were stayed by the Hon'ble High Court of Madras on the Writ Petition filed by The Indian Institute of Architects" on behalf of its Members. As such, the Service Tax was not being paid by them. However, as soon as, the appellants came to know about the vacation of Stay Order by the Hon'ble High Court, they deposited the tax along with interest leviable thereon immediately thereafter. In the circumstances, their contention is that there was no mala fide on part of the appellants and imposition of personal penalties upon them is neither justified nor warranted.
5. In view of the above, it become clear that the tax was not paid in time during the relevant period on account of the fact of pendency of writ petition before the Hon'ble Madras High Court and no mala fide can be attributed to the appellant. The said fact constituted a reasonable cause for the appellant to believe that the service tax is not payable, thus attracting the provisions of Section 80. I do not find any justification for enhancement of penalty. Accordingly, the impugned order of Commissioner is set aside and the Order-in-Original is restored. Appeal is allowed in the above terms.
(Pronounced in Court on 16-10-07)