Custom, Excise & Service Tax Tribunal
M/S Creative Tours & Travels Pvt. Ltd vs Commissioner Of Service Tax, Mumbai on 29 September, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Appeal No. ST/76/08 (Arising out of Order-in-Original No. 32/STC/SJS/07-08 dated 18.1.2008 passed by the Commissioner of Service Tax, Mumbai). For approval and signature: Honble Shri M.V. Ravindran, Member (Judicial) Honble Shri 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 : Yes 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 Creative Tours & Travels Pvt. Ltd. Appellant Vs. Commissioner of Service Tax, Mumbai Respondent Appearance: Shri S.P. Sheth, Advocate for Appellant Shri Vikram, Kaushik, AC (AR) for Respondent CORAM: SHRI M.V. RAVINDRAN, MEMBER (JUDICIAL) SHRI C.J. MATHEW, MEMBER (TECHNICAL) Date of Hearing: 29.09.2015 Date of Decision: 20.10.2015 ORDER NO. Per: M.V. Ravindran
This appeal is directed against Order-in-Original No. 32/STC/SJS/07-08 dated 18.1.2008 passed by the Commissioner of Service Tax, Mumbai.
2. The relevant facts that arise for consideration are the appellant herein has registered with the authorities as Air Travel Agency and discharged the Service Tax liability. Officers of the DGCEI visited the premises and on thorough investigation came to conclusion that the appellant had not properly discharged the Service Tax liability and was involved in evasion of Service Tax. After recording various statements, the show-cause notice was issued to the appellant that demand of differential amount of Service Tax for the period April, 2002 to March, 04 with interest and also for imposition of penalties. The appellant contested the show-cause notice and stated that they discharged the entire Service Tax liability before the issue of show-cause notice and also paid the interest. They claimed that they have not evaded the Service Tax and paid interest on them. They were under severe financial difficulty and heavy bad debt, due to which they are unable to discharge Service Tax liability. In support of which they produced their Bank Statement and over draft facilities with the Bank. Adjudicating authority after following the due process of law confirmed the Service Tax liability along with interest and appropriated the amounts paid. Considering the situation of the appellant, the adjudicating authority exercised the power granted under Section 80 of the Finance Act, 1994 and dropped the proceedings initiated by the show-cause notice for imposition of penalties. Commissioner of Service Tax, Mumbai exercising the powers of Section 84 of the Finance Act, 1994, reviewed the Order-in-Original and issued show-cause notice to the appellant as to why the penalties should not be imposed on them. The appellant contested the show-cause notice before the Reviewing authority. The Reviewing Authority i.e. Commissioner of Service Tax, did not agree with the contentions raised and came to conclusion that penalties under Section 76 and 78 of the Finance Act, 1994 needs to be imposed and did so by the impugned order before us.
3. Learned Counsel would submit that the Reviewing authority has wrongly exercised the provisions of section 84 of the Finance Act, 1994. He would draw our attention to the Order-in-Original and submit that the adjudicating authority had recorded clearly that there was no modus operandi or mens rea on part of the appellant for non-discharging Service Tax liability due to severe financial trouble. It is his submission that the Reviewing authority could not have reviewed situation, wherein the adjudicating authority has exercised the discretionary power of waiver of the penalty. He would draw our attention to the judgment of this Tribunal in the case of KNR Contractors Vs. CCE 2011 (21) STR 436 (Tri-ND), wherein it was held that if the authority has exercised discretion of waiver of the penalty, coming to a conclusion that there was reasonable cause, same could not be called in question. He would also submit that the judgment of the Hon'ble High Court of Karnataka in the case of Commissioner of Service Tax Vs. Handimann Services Ltd. 2011 (24)STR 641 (Kar) is also on the very same point and also the proposition. In the case of Commissioner of Central Excise, Jalandhar Vs. Darmania Telecom 2009 (14) STR 145 (P&H), the same proposition has been accepted by the Hon'ble High Court.
4. The learned DR submits that the case was detected by the agency after thorough investigation, which would have escaped the attention. It is submission that though the appellant had discharged Service Tax liability with interest, penalty provisions should have been applied in its full force by the adjudicating authority, which now had been done so by the Reviewing authority.
5. We have considered the submissions made at length by both sides and perused the records.
5.1 Undisputedly there was short payment of Service Tax liability which had been made good with interest for the period in question. In this appeal, only point that falls for our consideration is whether the Reviewing authority could have reviewed the order of the adjudicating authority for use of discretionary power under Section 80 of the Finance Act, 1994 for dropping the proceedings initiated for imposition of penalties.
5.2 On perusal of the Order-in-Original passed by the adjudicating authority, we find that in para 4.3, 4.4, 4.5 and 4.6, the adjudicating authority has given the detailed reasoning for not imposing penalties. As against the said fairly reasoned order, the Reviewing authority in the Order-in-Review has not recorded any reasoning as to why there was no justifiable cause and penalty needs to be imposed under various sections. The only reasoning given by the Reviewing authority is that but for the intervention of the Investigating Agency the short payment could have gone undetected.
5.3 We are not in agreement with the findings recorded by the Reviewing authority for imposing penalties on the appellant. First and foremost, we find that the adjudicating authority has exercised his discretionary power under Section 80 for dropping the proceedings to impose the penalty with a reasoned order. The reasoning given by the adjudicating authority are acceptable justification for non-imposition of penalties. We find strong force in the contentions raised by the learned Counsel that the Hon'ble High Court of Karnataka in the case of Handimann (supra) has settled the issue. We reproduce the relevant paragraphs: -
2.?The Asst. Commissioner, after due consideration of the grounds urged, held, no penalty is leviable for the reason that the service tax has been paid under Amnesty Scheme. However the Commissioner has imposed a penalty of Rs. 7,00,000/- under Sec. 78 and penalty of Rs. 200/- per day under Sec. 76 of the Finance Act, in pursuance of the power of suo motu revision. Aggrieved by the said order, the assessee filed an appeal to the Tribunal. The Tribunal, following the judgment of this court in the case of C.C.E. v. Sunitha Shetty - 2004 (174) E.L.T. 313 (Kar.) = 2006 (3) S.T.R. 404 (Kar.) and also the judgment of the Tribunal in M/s. Majestic Mobikes (P) Ltd. v. C.C.E. [2008 (11) S.T.R. 609 (Tri.)] held that the Commissioner was not justified in exercising his suo motu powers to interfere with a discretionary order passed by the original authority where he was satisfied with the cause shown and he had not imposed penalty. Aggrieved by the said order, the Revenue is in appeal.
3.?The judgment rendered by the Tribunal in Majestic Mobikes (P) Ltd. has been upheld by this court. Therefore in view of the judgment rendered by this court in C.C.E. v. Sunitha Shetty as well as Majestic Mobikes (P) Ltd. case, once the original authority being satisfied about the cause shown, exercised its power under Sec. 80 of the Act and did not impose penalty, the Commissioner has no jurisdiction to interfere with such discretionary orders and impose penalty in pursuance of his revisional jurisdiction. The Tribunal was justified in interfering with the said order and setting aside the same.
5.4 We also find that the Hon'ble High Court of Punjab & Haryana in the case of Darmania Telecom (supra) on the same issue has held as under: -
2.?The order-in-original was passed by the Assistant Commissioner on 15-6-2005 (A-1) and penalty of Rs. 1,000/- under Sections 76 and 78 of the Act was imposed by exercising power vested in him under Section 80 of the Act. The aforesaid discretion exercised by the Assistant Commissioner was interfered with by the Commissioner while exercising revisional power under Section 84 of the Act by raising it to Rs. 31,652/-. The Commissioner also recorded the finding that the assessee had suppressed the value of taxable service. However, the Tribunal set aside the order of the Commissioner passed in exercise of revisional power and restored the order-in-original by observing that leniency shown by the original authority in terms of Section 80 of the Act did not suffer from any illegality and could not have been interfered with by the revisional authority.
3.?Having heard learned Counsel for the Revenue we are of the view that the provisions of Section 80 of the Act in un-mistakable terms provide that despite the provisions of Section 78, no penalty should be imposed on the assessee for any failure referred in that section if the assessee has shown that there was reasonable cause for the said failure. The provision under Section 78 of the Act is required to be acted upon in the absence of finding of fraud, collusion, wilful mis-statement, suppression of facts etc., as envisaged by Section 78 of the Act. The order-in-original dated 15-6-2005 (A-1) does not record any finding of fraud, mis-statement etc., which could have been the basis for acquiring jurisdiction to impose the penalty. Accordingly, the Assessing Authority exercised the power under Section 80 of the Act and decided not to impose any penalty under Section 78. There was no basis for the Revisional Authority-cum-Commissioner to acquire the jurisdiction to impose penalty. There is no evidence produced before the revisional authority or any other authority to prove fraud, collusion, misrepresentation etc. so as to attract the application of Section 78 of the Act. In our view, the Tribunal has rightly restored the order of the Assessing Authority. Therefore, no question of law much less any substantial question of law would arise for determination of this Court.
5.5 It can be seen from the above reproduced ratio and the facts and circumstances of the case, the order of Reviewing authority is unsustainable and needs to be set aside and we do so.
6. The impugned order is set aside and the appeal is allowed with consequential relief, if any, in accordance with law.
(Pronounced in Court on .) (C.J. Mathew) (M.V. Ravindran) Member (Technical) Member (Judicial) Sinha 2 Appeal No. ST/76/08