Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise & S.T., ... vs M/S. Oyster Maritime India Pvt. Limited on 22 January, 2016
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad Appeal No. : ST/13126/2013 (Arising out of OIA-214-2013-RAJ-CE-AK-COMMR-A-AHD dated 08.05.2013, passed by Commissioner (Appeals) Central Excise, & S.T., Rajkot Commissioner of Central Excise & S.T., Rajkot : Appellant (s) VERSUS M/s. Oyster Maritime India Pvt. Limited : Respondent (s)
Represented by :
For Appellant (s) : Shri S.K. Shukla, Authorised Representative For Respondent (s) : Shri Abhishek Doshi, Chartered Accountant For approval and signature :
Mr. P.M. Saleem, Honble Member (Technical) 1 Whether Press Reporter 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 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, Honble Member (Technical) Date of Hearing / Decision : 22.01.2016 ORDER No. A/10050/2016 Dated 22.01.2016 Per : Mr. P.M. Saleem Revenue has filed this appeal aggrieved by the impugned Order-in-Appeal setting aside the penalties imposed under Sections 76 and 78 of the Finance Act, 1994.
2. The facts in brief are that the Respondents M/s. Oyster Maritime (India) Pvt. Limited, Gandhidham is a service provider under the category of Technical Testing and Analysis Services. They had taken Service Tax registration in April 2008. The Revenues case is that though the Respondent have taken registration, they have not filed ST-3 returns and have not remitted the service tax collected from the customers to the Govt. exchequer except for a meagre sum which was paid by way of adjusting cenvat credit taken on the inputs. The adjudicating authority confirmed the demand of service tax alongwith interest, and imposed penalties, including penalties under Section 76 and 78 of the Finance Act, 1994. In the appeal filed before the Commissioner (Appeals), the Respondents have not contested the service tax liability or interest thereupon. However they contested levy of penalties imposed on them by the adjudicating authority. The Commissioner (Appeals), while confirming the demand of service tax alongwith interest, set-aside the penalties imposed under Sections 76 and 78 of the Finance Act, 1994. Aggrieved by the same, the Revenue has filed this appeal.
2. Heard both sides. Learned Authorised Representative for Revenue submits that the Respondents service tax liability for the period 2007-08 to 2010-11 covered under two show cause notices comes to Rs. 19,59,776/-, as detailed in the table below:-
Year 2007-08 2008-09 2009-10 2010-11 Amount of sundry debtor for last F.Y. 0 771399 2010618 1879095 Billed Amount for the current F.Y. 917534 5377109 6723043 9922263 Amount of sundry debtor for the current F.Y. 771399 2010618 1879095 4769796 Net realised amount for the F.Y. on which S.Tax required to be paid (a)+ (b) (c) 146135 4137890 6854566 7031562 Rate of service tax 12.36% 12.36% 10.30% 10.30% Amount of service tax payable 18062 511443 706020 724251 He contended that though there was service tax liability of Rs. 18,026/- in the year 2007-08 and Rs. 5,11,443/- in 2008-09, the Respondents have paid only Rs. 4,59,974/- vide challan dated 08.01.2009, during the said period. He contends that only after the investigation was started the Respondents started paying the service tax, for the subsequent period also, though belatedly. He submits that service tax has been demanded on the amount collected and received by the Respondents from their customers, and this amount includes the Service Tax component also. Therefore, the Respondents were duty bound to remit the service tax amount collected by them from their customers to the Government on due dates. He also contends that Respondents were aware of their responsibilities and obligations as they were a registered service tax assessee from April 2008. He also drew attention of the Bench to the fact that the Respondents were availing the CENVAT credit on the inputs received, which indicate that the Respondents were fully aware of the provisions and procedures. He therefore, strongly argued that the non-payment of service tax was intentional and if it had not been for detection by the department, the same would have escaped the tax net. Therefore, he submits that the penalties under Sections 76 and 78 are justified.
3. On the other hand, the learned Chartered Accountant appearing for Respondents submits that they are not contesting the demand of service tax liability and interest thereon. Their plea is that the imposition of penalty under Section 76 and 78 is harsh, as they were not in a position to pay the service tax amount because of their financial constraints. He submits that huge payments from the customers were outstanding as is evident from the table in the OIO (which is reproduced at Para 2 above), and therefore they were finding it difficult to run the business itself. He further submits that there was no intention to evade the service tax and the amounts were reflected in their books of accounts. He also submits that in fact, they have paid the dues periodically. He further draws attention of the Bench to the fact that the first show cause notice dated 30.8.2011, was for the service tax amount of Rs. 12,35,525/- and they paid an amount of Rs. 12,25,126/- before issuance of show cause notice itself. He submitted that this is a fit case for invoking the provisions of Section 80 and not to impose penalty under Section 78. He further submits that there are provisions that no penalty can be imposed under Sections 76 and 78 simultaneously and the said provisions are applicable for the period prior to 10.05.2008 also. He relied upon the decision of the Tribunal in the case of Jivant Enterprise vs. Commissioner of Service Tax, Ahmedabad [2012] 27 taxmann.com 196 (Ahd. CESTAT). He also draw our attention to the amendment made in Section 78 of the Finance Act, 1994 from 01.4.2011 to the effect that penalty shall be reduced to 50% of the service tax not levied or paid, provided true and complete details of the transactions are available in the specified records. He submits that the show cause notice was issued on 30.08.2011 and therefore, these provisions may be considered as applicable, and the penalty may be reduced to 50%, as a worst case scenario.
4. On careful consideration of the arguments of both sides and perusal of the records, we observe that the Respondent had taken registration in April 2008 and was also availing CENVAT credit on the inputs. Therefore, we find force in the arguments of the learned Authorised Representative for Revenue that the Respondent was aware of his responsibilities and procedures and non-payment of service tax on due dates were not a mistake. Normally in such cases, we would have held that penalty under Section 78 is justified. However, in the peculiar facts and circumstances of this case, we find that there is enough reason to view the non-payment of service tax on due dates by the Respondents leniently. It is observed that the Respondents have paid almost the entire amount of service tax due before issuance of show cause notice. We also find that the legislature in its wisdom has also amended the provisions of Section 78, albeit from 01.4.2011, that the penalty under Section 78 may be reduced to 50% when true and complete details of the transactions are available in the specified records. In view of the same, we hold that the equivalent penalty imposed on the Respondents under Section 78 of the Finance Act, 1994, is to be reduced to 50% of the same in respect of the first show cause notice dated 30.08.2011, provided that the Respondents pay the said amount within thirty days from the receipt of this order.
5. As regards the penalty imposed under Section 76, the same is not imposable after 10.05.2008 as per the provisions itself. This Tribunal in the case of Jivant Enterprise vs. Commissioner of Service Tax, Ahmedabad (supra) held that if the show cause notices are issued after the date of amendment, penalties under Section 76 and 78 simultaneously cannot be imposed. In view of the same, we do not find any reason to interfere with the order of the Commissioner (Appeals) setting aside the penalty under Section 76.
6. The impugned orders are upheld with the above modifications. Revenue Appeal is allowed on the above terms.
(Order dictated and pronounced in the open Court) (P.M. Saleem) Member (Technical) .KL 6