Custom, Excise & Service Tax Tribunal
M Venkata Rao Infra Projects Pvt Ltd vs Cce Goa on 28 September, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
COURT No. I
APPEAL Nos. ST/87448/2015,87243/2016
(Arising out of Order-in-Appeal No. Goa-Excus-000-APP-039-14-
15 dated 24.9.2015 passed by Commissioner of Central Excise &
Customs (Pune Appeals-II) at Goa and Order-in-Original No. Goa-
Excus-COM-003-2016-17 dated 23.6.2016 passed by Commissioner
of Customs, Central Excise & Service Tax, Goa)
M. Venkata Rao Infra Projects Pvt. Ltd. Appellant
Vs.
Commissioner of Central Excise, Goa Respondent
Appearance:
Shri A. Sarveswara Rao, Advocate, for appellant Shri M.P. Damle, Assistant Commissioner (AR), for respondent CORAM:
Hon'ble Dr. D.M. Misra, Member (Judicial) Hon'ble Mr. Sanjiv Srivastava, Member (Technical) Date of Hearing: 08.08.2018 Date of Decision: 28.09.2018 ORDER No. A/87495-87496/2018 Per: Sanjiv Srivastava Two appeals under consideration have been filed by the Appellants who are having common PAN but distinct service tax registration. Since the issues involved in both the Appeals are linked and interdependent they have been taken up for consideration simultaneously.
2 ST/87448/2015,87243/2016 2.1 Appellant M/s Venkata Rao Infra Projects Pvt Ltd Bldg No 6, Models Splendor Bhi Ramesh Chowgule Bungalow, NIO Dona Paula Goa having STC No AAECM6274BST001, filed a declaration dated 30.12.2013 for payment of Service Tax Amounting to Rs 1,06,41,441/- (Rs One Crore Six Lakhs Forty One Thousand Four Hundred and Forty One only) under Voluntary Compliance Encouragement Scheme, 2013 (VCES) and also submitted three challans dated 26.12.2013 and one challan dated 29.12.2013 towards payment of service tax amount of 65,61,360/- (Rupees Sixty Five Lakhs Sixty One Thousand Three Hundred and Sixty Only). On scrutiny of the said declaration and challans it was observed that Appellant had paid the amount in respect of their unit having STC No AAECM6274BST002 and based in Vishakhapatnam. Since on enquiry appellants failed to remove the discrepancy, and deposit the amount under the account head of Goa Unit the natural corollary was that they had failed to make deposit of 50% of Service Tax amount declared by the due date and hence declaration under VCES was liable to e rejected. It was also gathered from Director General Central Excise Intelligence Goa Regional Unit (DGCEI), that certain enquiries had been initiated against the said Goa Unit 3 ST/87448/2015,87243/2016 as on 1.03.2013, hence the unit was not qualified to make the declaration under the VCES scheme. A show cause notice for rejecting the appellant declaration was issued and adjudicated against the Appellant. On appeal, Commissioner (Appeal) upheld the order of adjudicating authority, rejecting the declaration made by the Appellant on the ground that they had failed to make fifty percent/ 100% of admitted tax liability by the due date. Against this order of Commissioner (Appeal), Appeal No ST/87448/15-MUM has been filed. 2.2 As result of investigation taken by DGCEI, it was found that Appellants had during the period from 01.04.2011 to 31.03.2014 had received a sum of Rs 9,29,99,080/- on which service tax amounting to Rs 1,08,66,653 (Rupees One Crore Eight Lakhs Sixty Six Thousand Six Hundred and Fifty Three) was payable by the GOA unit (STC NO AAECM6274BST001). A show cause notice demanding the service tax payable was issued to them on 01.07.2014. Para 19 of show cause notice, records as follows;
"19 During the course of investigation M/s MVR produced the copie of following GAR-7 Challan towards payment of Service Tax on the taxable value received by them for the works executed during the period April 2011 to March 2014.
4 ST/87448/2015,87243/2016
Table 1: Details of Challan for payment Amount 'Rs
Assessee Code Challan Date Service Cess Interest
No Tax
AAECM6274BST002 00046 29.03.2013 1076592 32298 54177
AAECM6274BST002 00043 29.03.2013 1494982 44850 104750
AAECM6274BST002 00049 30.04.2013 547317 16419 48744
AAECM6274BST002 00050 30.04.2013 17664 530 21111
AAECM6274BST002 00023 30.09.2013 337654 10130 30417
AAECM6274BST002 00025 30.09.2013 1158155 34745 0
AAECM6274BST002 00004 26.12.2013 4084206 122526 0
AAECM6274BST002 00003 26.12.2013 720262 21608 29268
AAECM6274BST002 00001 26.12.2013 407629 12229 20670
AAECM6274BST002 00005 29.03.2014 700543 21017 21363
Total 10545004 316352 330500
On scrutiny of GAR-7 Challans provided by M/s MVR, it was noticed that they have remitted the Service Tax payments into Assessee Code No AAECM6274BST002 instead of remitting the same to Assessee Code No AAECM6274BST001. Assessee code No AAECM6274BST002 pertains to their business operations at Vishakhapatnam. The Assessee Code No AAECM6274BST001 is allocated by Commissioner of Customs, Central excise and Service Tax Goa for taxable services under "Commercial or Industrial Construction Service" and Work Contract Services. Since the service tax liability pertains to the taxable service rendered in the jurisdiction of Goa, in the absence o centralized 5 ST/87448/2015,87243/2016 registration. M/s MVR ought to have remitted the service tax payment into their STC No AAECM6274BST001"
The show cause notice has been adjudicated by the Commissioner and following order passed-
(i) "I classify the services rendered by M/s M Venkatrao Infra Projects Pvt Ltd., under the category of the taxable service 'Work Contracts Service/ declared Service" for the period 1.4.2011 to 31.03.2014 under Section 65(105)(zzzza) of the Finance Act, 1994/ Section 66E(h) of the Finance Act, 1994.
(ii) I confirm the demand of Service Tax of Rs 1,08,66,653/- on the taxable value of Rs 9,29,99,080/- received by them towards rendering of the above said services as per proviso to sub section (1) of Section 73 of the Finance Act, 1994.
(iii) I hold that interest at the appropriate rate is payable under Section 75 of the Finance Act, 1994.
(iv) I appropriate the Service Tax amounting to Rs 1,08,61,356/- deposited them into against the demand of Service Tax at (ii) above.
(v) I appropriate the interest amounting to Rs 3,30,500/- deposited by them into against the demand of interest at (iii) above.
(vi) I am not imposing any penalty under Section 76 of the Finance Act, 1994
(vii) I impose a penalty of Rs 1,08,66,653/- under Section 78 of the Finance Act, 1994. However, if the noticee pays the service tax confirmed above along with interest and 25% of the service tax as penalty within 30 days of receipt of this order, then the penalty will be reduced to 25% of the service tax confirmed above, otherwise the penalty above would remain the same.
6 ST/87448/2015,87243/2016
(viii) I impose a penalty of Rs 10,000/- under Section 77 of the Finance Act, 1994 for contravention of the provisions of Section 70 of the Finance Act, 1994." Against this order of Commissioner, Appeal No ST/87243/16-MUM has been filed.
3.1 Challenging the order of Commissioner (Appeal) in their appeal Appellant submitted that- a. They are having two registrations one in respect of their operations in Vishakhapatnam and one for operations in Goa.
b. They had filed the VCES declaration in respect of their operations in Goa. However erroneously while making the challans for payment of service tax liability the challan were made indicating the STC No of their unit in Vishakhapatnam instead of the unit in Goa. However there is no dispute about the fact that the amounts were actually paid by them.
c. Since the payments made by them were actually made department should have treated the said payments toward the admitted service tax liability for Goa Unit in respect of which VCES declaration was filed. For stating this they relied upon following decisions:-
i. Order Dated 19.09.2014 in WP No 1384/2008, in case of Hindustan Unilever Ltd vs Dy 7 ST/87448/2015,87243/2016 Commissioner of Commercial Taxes, Corporate Division & Others.
ii. Commissioner Central Excise & Service Tax vs K K Kedia [(2014) 35 STR 383 (T)] iii. Pepsico India Holdings (P) Ltd. Vs Commissioner Central Excise Allahabad [(2010) 255 ELT 299 (T)] 3.2 Challenging the order of Commissioner, Appellant has in second appeal urged that:-
a. It was only on account of the clerical error and communication gap that the amount required to be paid in respect of STC No in Goa jurisdiction, the same was deposited in the name of STC No in Vishakhapatnam. b. Commissioner has in his order relying on various decisions accepted the payments shown in respect of their Vishakapatnam unit for discharging the liability of Service Tax due in Goa.
c. They had paid the entire amount of Tax due along with the interest before the issuance of Show Cause Notice.
d. Commissioner has proceeded to impose penalty on them without showing any mensrea.
4.1 Shri A Sarveswara Rao, Advocate appeared for the Appellant and Revenue was represented by Shri M P Damle, Assistant Commissioner Authorized Representative.
8 ST/87448/2015,87243/2016 4.2 Arguing for the Appellants, learned advocate stated that-
a. Commissioner (Appeal) was not justified in rejecting their appeal, for the reason that the amounts required to be paid by them were erroneously paid by them in account head of their unit at Vishakhapatnam. b. Following the decisions of various authorities, which learned Commissioner has subsequently followed, he should have accepted the payments made in name of Vishakhapatnam unit as payments made in respect of the Goa unit for filing the VCES declaration and should have proceeded to allow their appeal. While relying again on the decisions cited in his appeal memo, he further relied upon the decisions of Hon'ble Gujarat High Court in case of-
i. Devang Paper Mills Pvt Ltd.[2016 (41) STR 418 (Guj)];
ii. Auro Pumps Pvt Ltd [2017 (353) ELT 7 (Guj)] c. Commissioner (Appeal) has in his order agreed that there was no investigation pending against the unit as on 01.03.2013 and hence they were justified in law to opt for VCES, for which they had filed the declaration.
d. In case Commissioner (Appeal) had allowed the appeal, the proceedings in the second case would have 9 ST/87448/2015,87243/2016 become infructuous and they would have got the immunities as available in respect persons opting for VCES scheme.
e. Commissioner has in his order allowed the appropriation of the amount purported to be paid in account of Vishakhapatnam, for payment of tax confirmed by him in respect of Goa unit. f. They are challenging the penalty imposed by the Commissioner under Section 77 and Section 78. This penalty has been imposed by the Commissioner on them without establishing any mensrea. Commissioner was not justified ion imposing the penalty when he had accepted the payments made and appropriated them towards the demands confirmed.
4.3 Arguing for revenue, learned AR submitted- a. It is a fact that the appellants had not deposited any penny in respect of the operations carried out by them in respect of the Goa unit, on the due date, when the tax was required to be paid.
b. Even when they filed the VCES declaration they did not made the payments as required in respect of the unit in Goa jurisdiction which was essential requirement for opting for the said scheme. c. When the discrepancy was pointed out by the department, Appellants have instead of making good the 10 ST/87448/2015,87243/2016 discrepancy, sought to justify their act and stated that the error in making the challan was a bonafide clerical error and should be condoned, and there declaration accepted which was not in accordance with the procedure laid down for opting for the scheme. Since the Appellant had not satisfied the procedure laid down for opting for the scheme, the order of Commissioner (Appeal) cannot be faulted with.
d. Commissioner order to cannot be faulted because once the appellants have not discharged the tax liability by the due date they have contravened the provisions of Finance Act, 1994 and hence are liable to penalty. e. Further the Commissioner has in his order clearly held that Appellant was during the relevant period collecting the service tax from their customers and not filing ST-3 returns or paying the service tax in the account of government. Since they were not paying the service tax amount due to the government account by the due date, penalty against the appellant is justified. 5.0 We have considered the appeals filed and also the submissions made by both the sides during the course of arguments and in written submissions filed. 5.1 It is a fact that, while filing the VCES declaration the Appellants have failed to fulfill the requirements prescribed for the said scheme. The declaration was to 11 ST/87448/2015,87243/2016 be filed and appellants were required to deposit the 50% of admitted tax liability by 31.12.2013. However the appellants have failed to comply with the said requirement, as they had filed the challans in respect of their unit in Vishakhapatnam. The submissions made by the appellants to the effect that the payments made by them in against the STC No of Vishakhapatnam unit should be considered as payment made for their Goa unit is devoid of merits. The decisions relied upon by the Appellant do not help to advance the cause of the Appellant, because none of these decisions are in respect specific one time compliance scheme like VCES. There may be errors committed in day to day functioning but not in case when a person is specifically opting for the beneficial scheme. It is also settled principle in law that every prescribed condition cannot be brushed aside as procedural and act of the person justified as bonafide, just to promote the cause of the appellants. Hon'ble Supreme Court has in case of Mihir Textiles [1997 (92) elt 7 (SC)] as follows:
"11.Learned counsel for the appellant raised an alternative contention that the deficiency in the contract for obtaining the concessions should not have been taken so seriously and the Customs Authorities should have granted the reliefs as the appellants had performed their part in complying with the conditions. Non-compliance of the conditions, according to the counsel, was only due to the lapses on the part of the authorities concerned. This 12 ST/87448/2015,87243/2016 contention was expatiated to the extent that the conditions prescribed in the proviso to entry No. 84.66 are merely directory and not mandatory. According to the counsel, the conditions prescribed, if interpreted strictly, would result in the denial of concessional reliefs which statute has conferred on the citizen.
12.In support of that contention, counsel invited our attention to the decision of a Constitution Bench of this Court in State of U.P. v. Manbodhan Lal Srivastava, 1958 SCR 533, wherein their Lordships were considering the implication of non-compliance with the conditions provided in Article 320(3) of the Constitution on an order imposing punishment to a Government servant without reference to the Public Service Commission. While considering that question learned Judges made a reference to the Privy Council decision in Montreal Street Railway Company v. Normandin - AIR 1917 PC 142 and the Federal Court decision in Biswanath Khemka v. Emperor - AIR 1945 FC 67. The Constitution Bench held that the provisions of Article 320(3) are not mandatory and non-compliance of those provisions does not afford any cause of action in a court of law. Privy Council in the above quoted decision has observed that the question whether provisions in a statute are directory or imperative depends upon the object of the statute and no general rule can be laid down. "When the provisions of the statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of this duty would work serious general inconvenience or injustice to persons who have no control over those entrusted with the duty and at the same time would not promote the main object of the legislature, it has been the practice to hold such provisions to be directory." This is not a case where a certain provision is 13 ST/87448/2015,87243/2016 mandatory or directory. Here the question is whether concessional relief of duty which is made dependent on the satisfaction of certain conditions can be granted without compliance of such conditions. No matter even if the conditions are only directory."
5.2 It is also settled principle in law that no one should be allowed to take benefit of his own wrongs. (commodum ex injuria sua non habere debet and nullus commodum capers potest de injuria sua propria.) In the present case undisputedly appellants had been evading the payment of Service Tax during the period 2011 onwards. VCES scheme was intended to help the persons, who would like to discharge the tax liability and was a onetime measure. Since the appellants were evading the payment of tax willfully during the relevant period they cannot claim benefit of such scheme without showing the compliance in respect of the scheme. Further how in such a situation can anyone justify that the challans produced were meant only in respect of the unit in Goa. Appellants were operating and providing taxable services from their Goa unit and also Vishakhapatnam unit. Appellants had filed the declaration under the VCES scheme on 31.12.2013, along with the challans dated 29.12.2013 & 30.12.2013. Since the declaration was filed only on the last date for making 50% of the payments under the 14 ST/87448/2015,87243/2016 scheme, they had virtually denied the departments the opportunity of any cross verification. Further even if it is accepted that the error was made while filing the challans in first instance, appellants, should have established their bonafides by filing the challans for remaining amount in correct manner which they failed to do.
5.3 Accordingly we do not find any merits in the appeal filed by the Appellants against the order of Commissioner (Appeal) upholding the order of adjudicating authority rejecting the declaration filed by the Appellants under VCES scheme.
5.4 Now coming to the second appeal, that is against the order of Commissioner. Commissioner has in his order, without agreeing to the plea of the Appellants on VCES declaration, appropriated of the amount paid by the amount under STC No of the Vishakhapatnam unit for payment of Service Tax liability confirmed by them against the unit in Goa. The said adjustment has ben allowed by the Commissioner in light of the decisions in case Devang Paper Mils Pvt Ltd [2016 (41) STR 418 (Guj) & Sahara India Network [2016 (41) STR 145 (T)]. However before such appropriation he has verified and satisfied himself that these amounts were paid only in respect of the unit in Goa, as is evident from para 33, reproduced below:-
15 ST/87448/2015,87243/2016 "33. I find from the notice that notice confirm the payment of Service Tax amounting to Rs 1,08,61,356/-
(including cess) and interest amounting to Rs 3,30,500/- under the Assessee Code AAECM6274BST002. The notice has also not disputed the claim of the noticee vide letter dated 23.06.2014 (Para 19 of Notice) that they have not executed any other projects which attract Service Tax liability either in Vishakhapatnam or at any part of India during the aforesaid period except these three commercial projects and that the question of payment of Service Tax under STC No AAECM6274BST002 does not arise. Thus it is clear from the notice that noticee do not have any other Service Tax liability other than addressed in the notice and the deposit of service tax made by the noticee into wrong code is towards their Service Tax liability of STC No AAECM6274BST002."
5.5 It is also an admitted and undisputed fact that appellants were registered assessee and were paying service tax. However subsequently they stopped payment of service tax and the month wise service tax during the period under dispute is shown in table 2 below:
Table 3: Month wise tax payable Amounts in Rupee Year Month Taxable Service Tax Value Tax Payable Rate 2011- April 7356773 10.30% 75748 12 May 0 10.30% 0 June 4506171 10.30% 464136 July 5098300 10.30% 525125 16 ST/87448/2015,87243/2016 August 0 10.30% 0 September 0 10.30% 0 October 0 10.30% 0 November 2613385 10.30% 269179 December 0 10.30% 0 January 2120049 10.30% 218365 February 8792372 10.30% 905614 March 0 10.30% 0 Total 30487050 10.30% 2458167 2012- April 3216864 12.36% 397604 13 May 5258079 12.36% 649899 June 3649690 12.36% 451102 July 2177922 12.36% 269191 August 2739227 12.36% 338568 September 2177922 12.36% 269191 October 3878226 12.36% 479349 November 7408809 12.36% 915729 December 0 12.36% 0 January 0 12.36% 0 February 2978018 12.36% 368083 March 6988944 12.36% 863083 Total 40473701 12.36% 5001799 2013- April 0 12.36% 0 14 May 0 12.36% 0 June 385807 12.36% 47686 July 2850383 12.36% 352307 August 1861149 12.36% 230038 September 0 12.36% 0 17 ST/87448/2015,87243/2016 October 7537940 12.36% 931689 November 0 12.36% 0 December 6222322 12.36% 769079 January 0 12.36% 0 February 3180726 12.36% 393138 March 0 12.36% 0 Total 22038327 12.36% 2723937 Grand 92999078 10866654 Total From the table 3 it is quite evident that appellant had to discharge service tax liability every month starting from April 2011. Though appellants were aware of the fact the service tax was to be paid by them every month they chose not to pay the same and also did not declared their tax liability by filing the monthly tax return ST-3 to be filed every six month. Even if it is accepted that appellants had erroneously deposited the amount due for Goa jurisdiction in the Vishakhapatnam jurisdiction and benefit of that deposit is allowed then also It was only in the on 29th March 2013, that appellants had made first deposit towards the discharge of service tax liability which arisen in the month of April 2011. Thus during the relevant period and time appellants have knowingly and willingly suppressed the value of taxable service and the tax due with intention to evade payment of tax. It was only when the investigations were started 18 ST/87448/2015,87243/2016 against the unit by DGCEI in March 2013, that Appellants came forward and made certain deposits towards the tax payment. In our view Commissioner was correct in holding that Appellant were liable to penal action under Section 78 of the Finance Act, 1994, as all the ingredient required to invoke the said section are present in this case.
5.6 The argument of Appellant with regards mensrea is not tenable in view of the following decisions:-
i. Madhumilan Syntex Ltd. Vs Union of India [2007 (210) ELT 484 (SC)] that "We are unable to agree with the above view of the High Court. Once a statute requires to pay tax and stipulates period within which such payment is to be made, the payment must be made within that period. If the payment is not made within that period, there is default and an appropriate action can be taken under the Act. Interpretation canvassed by the learned counsel would make the provision relating to prosecution nugatory." ii. M/s Gujarat Travancore Agency, Cochin Vs Commissioner Income Tax [1989 (42) ELT 350 (SC)] that "..... unless there is something in the language of statue indicating the need to establish the element of mensrea it is generally sufficient to prove that default in complying with 19 ST/87448/2015,87243/2016 the statue has occurred, In our view there is nothing in Section 271(1)(a) of the IT Act which requires that mensrea must be proved before penalty can be levied under that provision."
iii. Union of India Vs M/s Dharmendra Textile Processors [2008-TIOL-192-SC-LB] that "It is delinquency of the defaulter itself which establishes his blameworthy conduct .... Without any further proof of existence of mensrea."
iv. M/s Rajasthan Spinning and Weaving Mills {2009 (238) ELT (SC) that ".....We completely fail to see how payment of differential duty, whether before or after the show cause notice is issued can alter the liability for penalty, the conditions for which are clearly spelt out in Section 11AC of the Act."
5.7 Since appellants have not filed the ST-3 returns during the relevant period Commissioner was also write in imposing penalty under Section 77 of the Finance Act, 1994.
5.8 Thus we do not find any merits in this appeal filed by the Appellant.
20 ST/87448/2015,87243/2016 6.0 The Appeal No. ST/87448/2015-MUM & ST/87243/2016-MUM filed by the appellant are dismissed.
(Pronounced in court on 28.09.2018) (Dr. D.M. Misra) (Sanjiv Srivastava) Member (Judicial) Member (Technical) tvu