Custom, Excise & Service Tax Tribunal
Shree Digvijay Cement Co Ltd vs Commissioner Of Service Tax-Service ... on 9 August, 2016
In The Customs, Excise & Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad ~~~~~ Appeal No : ST/13568/2014 (Arising out of OIA-AHM-SVTAX-000-APP-109-14-15 Dated 31/07/2014 passed by Commissioner (Appeals) of Service Tax-SERVICE TAX AHMEDABAD) Shree Digvijay Cement Co Ltd : Appellant (s) Vs Commissioner of Service Tax-SERVICE TAX AHMEDABAD : Respondent (s)
Represented by:
For Appellant (s) : Shri Hirak Ganguly, Advocate For Respondent (s): Shri Naresh Satwani, Authorised Representative For approval and signature :
Mr. P. M. Saleem, Hon'ble Member (Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3. Whether their Lordships wish to see the fair copy of the order?
Seen
4. Whether order is to be circulated to the Departmental authorities?
Yes CORAM :
Mr. P. M. Saleem, Hon'ble Member (Technical) Date of Hearing / Decision : 09.08.2016 ORDER No. A/10702 / 2016 Dated 09.08.2016 Per : Mr. P. M. Saleem This appeal is filed by Shree Digvijay Cement Co Ltd., aggrieved by the impugned order-in-appeal dated 31.07.2014 passed by the Commissioner (Appeals), in which he had interalia, imposed penalty on the appellants under Section 76 of the Finance Act, 1994, as also penalty under Section 78 of the Finance Act, 1994. The appellants have contended in their appeal that in the instant case, penalties are neither imposable under Section 76 nor Section 78 of the Finance Act, 1994.
2. Heard both sides. The Learned Advocate appearing for the appellants submits that the appellants had not paid the service tax because of a bonafide mistake and there was no wilful intention to evade service tax. He further submits that as soon as the non-payment was pointed out in the audit conducted by the department, they had paid the service tax and interest, even before the issuance of show cause notice. Hence, he argues that no penalties are imposable under Section 76 or Section 78 of the Finance Act, 1994 readwith Section 73 (3) and Section 80 of the Finance Act, 1994. He also relied upon the decision of the Honble Karnataka High Court in the case of Commissioner vs. Manipal County [2014 (36) S.T.R. J188 (Kar.)] and the decision of the Tribunal in the case of Arvind Limited vs. Commissioner of Service Tax, Ahmedabad [2010 (19) S.T.R. 752 (Tri.- Ahmd.)].
3. On the other hand, the Learned Authorised Representative for the Revenue submits that the Audit held by Revenue had found out that the freight charges shown in the Freight Ledger do not tally with the figures shown in the ST-3 Returns filed by them in the year 2005-06, 2006-07 and 2007-08. The service tax payable on such differential amount of freight is demanded in the show cause notice. Therefore, he contends that the appellants had suppressed the facts in the ST-3 Returns filed and hence impositions of penalty under Section 76 as well as Section 78 are appropriate in the instant case. He contends that the provision of 76 at the relevant time only stated that whoever failed to pay such tax would be liable to penalty under Section 76. There was no condition as to intention to evade payment of duty nor wilfulness in Section 76 at the relevant time. He therefore contends that penalty automatically follows in case of non-payment or short payment of service tax as per the provisions of Section 76. As regards Section 78, he submits that the appellants had continued to suppress the facts in the ST-3 Returns filed in the 3 years. He contends that this is a deliberate suppression which the appellants repeated year after year with the clear intention to evade payment of appropriate service tax. Hence, the provisions of Section 78 is attracted and penalty is rightly imposed. He relied upon the decisions of Honble Kerala High Court in the case of Assistant Commissioner of Central Excise vs. Krishna Poduval [2006 (1) S.T.R. 185 (Ker.)] and Honble Delhi High Court in the case of Bjaj Travels Ltd. Vs. Commissioner of Service Tax [2012 (25) S.T.R. 417 (Del.)] and the decision of the Larger Bench of Tribunal in the case of Sunil Hi-Tech Engineers Ltd. Vs. Commissioner of Central Excise, Nagpur [2014 (36) S.T.R. 408 (Tri.- Mumbai)].
4. We have heard both sides at length and considered their contentions carefully and perused the records. It is observed that in the instant case the appellants had remitted the service tax alongwith interest before issuance of show cause notice. The issue is whether the penalties under Sections 76 and 78 are imposable under the circumstances. The provisions of the Section 76 and 78 during the relevant period were as follows:-
76.?Penalty for failure to pay service tax. Any person, liable to pay service tax in accordance with the provisions of S. 68 or the rules made thereunder, who fails to pay such tax shall pay in addition to paying such tax, and interest on that tax in accordance with the provisions of S. 75, a penalty which shall not be less than one hundred rupees for every day during which such failure continues but which may extend to two hundred rupees for every day during which such failure continues, so, however, that the penalty under this clause shall not exceed the amount of service tax that he failed to pay. 78.?Penalty for suppressing value of taxable service. If the Assistant Commissioner of Central Excise or, as the case may be, Deputy Commissioner of Central Excise in the course of any proceedings under this Chapter is satisfied that any person has, with intent to evade payment of service tax, suppressed or concealed the value of taxable service or has furnished inaccurate value of such taxable service, he may direct that such person shall pay by way of penalty, in addition to service tax and interest, if any, payable by him, a sum which shall not be less than, but which shall not exceed twice, the amount of service tax sought to be evaded by reason of suppression or concealment of the value of taxable service or the furnishing of inaccurate value of such taxable service:
Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by reason of-
(a) fraud; or
(b) collusion; or
(c) wilful mis-statement; or
(d) suppression of facts; or
(e) Contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax, the person, liable to pay such service tax or erroneous refund, as determined under sub-section (2) of S. 73, shall also be liable to pay a penalty, in addition to such service tax and interest thereon, if any, payable by him, which shall not be less than, but which shall not exceed twice, the amount of service tax so not levied or paid or short-levied or short-paid or erroneously refunded :
Provided that where such service tax as determined under Sub-s. (2) of S. 73, and the interest payable thereon under S. 75, is paid within thirty days from the date of communication of order of the Assistant Commissioner of Central Excise or, as the case may be, the Deputy Commissioner of Central Excise determining such service tax, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent of the service tax so determined :
Provided further that the benefit of reduced penalty under the first proviso shall be available only if the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso :
Provided also that where the service tax determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, then, for the purpose of this section, the service tax as reduced or increased, as the case may be, shall be taken in account :
Provided also that in case where the service tax determined to be payable is increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, then, the benefit of reduced penalty under the first proviso shall be available, if the amount of service tax so increased, the interest payable thereon and twenty five per cent of the consequential increase of penalty have also been paid within thirty days of communication of the order by which such increase in service tax takes effect.
Explanation - For the removal of doubts, it is hereby declared that-
(1) The provision of this section shall also apply to cases in which the order determining the service tax under sub-section (2) of S. 73 relates to notices issued prior to the day on which the Finance Bill, 2003 receives the assent of the President;
(2) Any amount paid to the credit of Central Government prior to the date of communication of the order referred to in the first proviso or the fourth proviso shall be adjusted against the total amount due from such person.
5. On perusal of the provisions of Section 76 is clear that any person who fails to pay service tax shall be liable to a penalty under the provisions of said section. There are no conditions or ifs and buts in the said Section. Hence, the contention of the appellants that they had not paid the service tax because of a bonafide mistake is not relevant. As regards penalty under Section 78, the same is imposable if service tax is not paid with intend to evade payment of service tax by suppressing or concealing the value of taxable service. We find that in the instant case that the appellant which is a limited company had suppressed the figures of freight charges paid in the ST-3 Returns filed. However, they had shown the correct figures in the ledgers, which was detected by the Central Excise Audit Officers. If, the audit had not detected the same, the service tax would not have been paid and the public exchequer would have been poorer by the said amount. Therefore, we find that penalty is rightly imposed under Section 78 on the appellants. The provisions of Section 73 or Section 80 of the Finance Act by which penalty need not be imposed if the Service Tax is paid before issuance of show cause notice are not applicable when there is deliberate suppression of facts and therefore intention to evade service tax.
6. We find that the Ld. Counsel for the appellants have relied upon the decisions of the Honble Karnataka High Court in the case of Manipal County and the decision of Tribunal in the case of Arvind Limited. We find the facts in these cases are different. The Honble Kerala High Court in the case of Assistant Commissioner of Central Excise vs. Krishna Poduval (supra) has examined the provisions of Section 76 and 78, in detail, as it stood at the relevant period. The Honble High Court held as follows:-
11.?The penalty imposable under S. 76 is for failure to pay service tax by the person liable to pay the same in accordance with the provisions of S. 68 and the Rules made thereunder, whereas S. 78 relates to penalty for suppression of the value of taxable service. Of course these two offences may arise in the course of the same transaction, or from the same act of the person concerned. But we are of opinion that the incidents of imposition of penalty are distinct and separate and even if the offences are committed in the course of same transaction or arises out of the same act, the penalty is imposable for ingredients of both the offences. There can be a situation where even without suppressing value of taxable service, the person liable to pay service tax fails to pay. Therefore, penalty can certainly be imposed on erring persons under both the above Sections, especially since the ingredients of the two offences are distinct and separate. Perhaps invoking powers under S. 80 of the Finance Act, the appropriate authority could have decided not to impose penalty on the assessee if the assessee proved that there was reasonable cause for the said failure in respect of one or both of the offences. However, no circumstances are either pleaded or proved for invocation of the said Section also. In any event we are not satisfied that an assessee who is guilty of suppression deserves such sympathy. As such, we are of opinion that the learned Single Judge was not correct in directing the 1st appellant to modify the demand withdrawing penalty under S. 76. Therefore, the judgment of the learned Single Judge, to the extent it directs the first appellant to modify Ext. P1 by withdrawing penalty levied under S. 76, is liable to be set aside and we do so. The cumulative result of the above findings would be that the Writ Petitions are liable to be dismissed and we do so. However, we do not make any order as to costs. Further the Honble High Court of Delhi in the case of Bjaj Travels Ltd. Vs. Commissioner of Service Tax (supra) has also examined the Sections 76 and 78 in detail and held as follows:-
15.?By their very nature, Sections 76 and 78 of the Act operate in two different fields. In the case of Assistant Commissioner of Central Excise v. Krishna Poduval - (2005) 199 CTR 58 = 2006 (1) S.T.R. 185 (Ker.) the Kerala High Court has categorically held that instances of imposition of penalty under Section 76 and 78 of the Act are distinct and separate under two provisions and even if the offences are committed in the course of same transactions or arise out of the same Act, penalty would be imposable both under Section 76 and 78 of the Act. We are in agreement with the aforesaid rule.
16.?No doubt, Section 78 of the Act has been amended by the Finance Act, 2008 and the amendment provides that in case where penalty for suppressing the value of taxable service under Section 78 is imposed, the penalty for failure to pay service tax under Section 76 shall not apply. With this amendment the legal position now is that simultaneous penalties under both Section 76 and 78 of the Act would not be levied. However, since this amendment has come into force w.e.f. 16th May, 2008, it cannot have retrospective operation in the absence of any specific stipulation to this effect. Going by the nature of the amendment, it also cannot be said that this amendment is only clarificatory in nature. We may mention that Punjab and Haryana High Court in its decision dated 12th July, 2010 in STA 13/2010, entitled Commissioner of Central Excise v. M/s. Pannu Property Dealers, Ludhiana [2011 (24) S.T.R. 173 (P & H)] has taken the view that even if the scope of two sections of the Act may be different, the fact that penalty has been levied under Section 78 could be taken into account for levying or not levying penalty under Section 76 of the Act. However, that was a case where the appellate authority had exercised its discretion not to levy the penalty under Section 76 of the Act, when the larger penalty had already been imposed under Section 78 of the Act. In this scenario, the appeal of the Revenue against the said view taken by the appellate authority was dismissed holding that appellate authority was within its jurisdiction not to levy the penalty under Section 76 of the Act having regard to the fact that penalty equal to service tax had already been imposed under Section 78 of the Act. This thinking was also in consonance with the amendment now incorporated though the said amendment may not have been applicable at the relevant time. Moreover, the amount involved is ` 51,026/- only. The Court, thus, chose not to interfere with the aforesaid discretion of the Tribunal.
17.?However, in the instant case, the appellate authority, including the Tribunal, has chosen to impose the penalty under both the Sections. Since the penalty under both the Sections is imposable as rightly held by Kerala High Court in Krishna Poduval (supra), the appellant cannot contend that once penalty is imposed under Section 78, there should not have been any penalty under Section 76 of the Finance Act.
18.?We, thus, answer question no. 3 against the assessee and in favour of the Revenue holding that the aforesaid amendment to Section 78 by Finance Act, 2008 shall operate prospectively. Further, this Tribunal in the case of Sunil Hi-Tech Engineers Ltd. Vs. Commissioner of Central Excise, Nagpur, (supra) has also examined the same issue and held as follows:-
7.8?The next issue is with regard to imposition of penalties under Sections 76, 77 and 78 of the Finance Act, 1994. Penalty under Section 76 is imposable whenever there is a default/delay in payment of service tax. On the occurrence of the default or delay, the provisions are attracted. There is no mens rea required to be proved for imposition of penalty under Section 76 as held by the Honble High Court of Kerala in the case of Krishna Poduval - 2006 (1) S.T.R. 185 (Ker.). Further, the Honble Apex Court in the case of Chairman SEBI v. Shriram Mutual Fund & Another [2006-TIOL-72-SC-SEBI] held that -
In our considered opinion, penalty is attracted as soon as the contravention of the statutory obligation as contemplated by the Act and the Regulation is established and hence the intention of the parties committing such violation becomes wholly irrelevant. A breach of civil obligation which attracts penalty in the nature of fine under the provisions of the Act and the Regulations would immediately attract the levy of penalty irrespective of the fact whether contravention must made by the defaulter with guilty intention or not. We also further held that unless the language of the statute indicates the need to establish the presence of mens rea, it is wholly unnecessary to ascertain whether such a violation was intentional or not. Therefore, we uphold the penalties imposed under Section 76 of the Finance Act, 1994 on the appellant. Similarly, penalty under Section 77 is for non-compliance of the statutory provisions of filing of returns. Inasmuch as there is non-compliance, the same is also liable to be upheld. As regards the penalty under Section 78, we have already held that the appellant has suppressed facts and therefore, extended period of time has been rightly invoked. If that be so, penalty under Section 78 is imposable since it is mandatory. Apex Court decision in Rajasthan Spinning and Weaving Mills [2009 (238) E.L.T. 3 (S.C.)] refer. However, for the period w.e.f. 10-5-2008, only penalty under Section 78 is imposable and not that under Section 76 in view of the express provisions provided in that respect in the said Section 78. However, we observe that penalty under Section 78 is imposable equal to the unpaid quantum of service tax and any service tax paid and appropriated has to be excluded while determining the penalty under Section 78
7. In view of the above, we find that the contentions of the appellants are not maintainable.
8. Appeal is dismissed.
(Dictated and pronounced in the open court on conclusion of hearing) (P. M. Saleem) Member (Technical) G.Y. ??
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