Custom, Excise & Service Tax Tribunal
M/S Indian Hotels Co. Ltd vs Commissioner Of Service Tax, Mumbai-I on 10 February, 2016
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. I APPEAL NO. ST/24/12-Mum (Arising out of Order-in-Original No. 63/BR-63/ST/Th-I/2011/2902 dated 12.10.2011 passed by the Commissioner of Central Excise, Thane-I.) For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical) =====================================================
1. Whether Press Reporters may be allowed to see : No 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 : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ===================================================== M/s Indian Hotels Co. Ltd. Appellant Vs. Commissioner of Service Tax, Mumbai-I Respondent Appearance: Ms. Aparna H., Advocate for Appellant Shri D. Nagvenkar, Addl. Commr. (A.R.) for Respondent CORAM: HONBLE SHRI M.V. RAVINDRAN, MEMBER (JUDICIAL) HONBLE SHRI C.J. MATHEW, MEMBER (TECHNICAL) Date of Hearing: 10.02.2016 Date of Decision: 10.02.2016 ORDER NO. Per: M.V. Ravindran:
This appeal is directed against the Order-in-Original No. 63/BR-63/ST/Th-I/2011/2902 dated 12.10.2011 passed by the Commissioner of Central Excise, Thane-I.
2. The relevant facts that arises for consideration are the appellant herein during the period 16.10.1998 to 31.03.2001 has rendered services in respect of Management Consultancy Services to various persons who sought the expertise in Hospitability Business. It is the case of the Revenue that the appellant had rendered the services of advice and consultancy for various individuals and independent organisations with regard to the entire operation of the hotel in order to bring those hotels to the level of Taj. A show-cause notice was issued and adjudicating authority after following due process of law, confirmed the demand of Service Tax along with interest and imposed penalties under Section 75(A), 76 and 78 of the Finance Act, 1994.
3. Learned Counsel after taking us through the various records submit that the appellant is engaged in this kind of services from 1988 onwards hence they were not very clear whether their services would fall under Management Consultancy Services from 16.10.1998. It is her submission that Audit Department had audited records and advised the appellant that tax liability arises. Appellant immediately took the registration and discharged the Service Tax liability. It is her submission that they paid the Service Tax liability on 16.10.2001, filed ST-3 returns on 19.10.2001 and paid interest on 28.03.2002 as also further Service Tax along with interest on 23.08.2002. She would submit that show-cause notice was issued on 09.12.2002 appropriating the amounts paid and also for imposing penalties. She would submit that the provisions of Section 73(i)(a) and impugned order passed confirming the demand is unsustainable as at the time of issuance of show-cause notice, the Assistant Commissioner had no material to believe that the Service Tax liability was not discharged due to reason of omission or failure. She would rely upon decision of Hon'ble High Court of Allahabad in the case of Naresh Kumar & Co. Pvt. Ltd. 2014 (35) STR 257 (All). She would submit that in any case, penalties are not imposable as the amounts of Service Tax and the interest was discharged before the issuance of show-cause notice, hence provision of Section 80 may be invoked and penalties be set aside.
4. Learned Departmental Representative on the other hand reiterates the findings of lower authorities and submit that penalties were correctly imposed.
5. On careful consideration of the submission made by both sides, we find that the appellant is not seriously contesting the Service Tax liability and the interest thereof.
6. We find from records on being pointed out by Audit party the entire Service Tax liability along with interest was paid up before the issuance of show-cause notice. In our considered view, appellant could have entertained bonafide believe that the advice, consultancy as given by them may not be covered under Management Consultancy Services. They could have also entertained bonafide believe that they are rendering the business of the various hotels in the same manner from 1988, no Service Tax liability arises. We find that the appellant has made out a justifiable case for setting aside the penalties imposed. We also find strong force in the argument made by the learned Counsel that on being pointed out that they discharged Service Tax along with interest before the issuance of show-cause notice. In our view, the Service Tax liability on Management Consultancy Services was in nascent stage when the Audit Party brought to the knowledge of appellant that Service Tax liability arises, which was discharged immediately. By invoking the provision of Section 80 of Finance Act, 1994, we set aside the penalties imposed by the adjudicating authority under Section 76, 77 and 78 of the Finance Act, 1994.
7. The appeal stand disposed of as indicated herein above.
(Operative portion of the order pronounced in open Court) (C.J. Mathew) (M.V. Ravindran) Member (Technical) Member (Judicial) Sp 4 APPEAL NO. ST/24/12-Mum