Custom, Excise & Service Tax Tribunal
Sai Sankalp Developers vs Thane Rural on 20 November, 2018
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: ST/88244/2018
Arising out of: Order-in-Appeal No. SK/GST(Audit-
II)/MUM/77/Appeals Thane/2018 dated
22.03.2018.
Passed by: Commissioner of Central GST and CX (Audit-
II), Mumbai.
Appellants - Represented by:
Sai Sankalp Developers Ms. Kirti Bhoite, Advocate
versus
Respondent - Represented by:
C.C.G.ST, Thane Rural Shri Dilip Shinde, Assitant Commissioner (AR) Date of hearing : 03/10/2018 Date of pronouncement:
CORAM Hon'ble Shri Ajay Sharma, Member (Judicial) ORDER NO: A/87968 / 2018 The only issue that arises for consideration in this appeal is whether the Appellant is liable to pay the penalty under Section 78 of the Finance Act, 1994.
2. The Appellant is a partnership firm engaged in "construction of complex services" and "commercial or industrial construction service" which has become taxable w.e.f. 01.07.2010. The period in ST/88244/2018 2 question is from July, 2010 to March, 2012. Learned counsel for the Appellant submitted that the Appellants were under bonafide belief that the service tax was not payable by the builder and that the same was payable by the contractors only and therefore they did not charge the service tax from their customers also. She further submitted that the Appellant came to know that the aforesaid levy was challenged before the Hon'ble High Court of Judicature at Bombay by the Maharashtra Chambers and Housing Industry (MCHI) and since the Hon'ble High Court granted interim stay on the levy, therefore, the Appellant neither charged the service tax nor deposited the same with the Authority concerned. She further submitted that the said service tax dispute was informed to them by their Chartered Accountant (CA) who assured them that there is no levy of service tax on their activity. Accordingly to her, when the department officers visited Appellant's premises on 30.08.2012 and informed the appellant that they are liable to pay service tax on their activities which has become taxable w.e.f 01.07.2010, the Appellant immediately paid the entire Service Tax with interest and late fees for delay in filing of ST-3 Return for the period July, 2010 to March, 2012, much prior to the issuance of Show Cause Notice dated 02.04.2013. The details of the payments made by the Appellant are as under:
ST/88244/2018 3 S.No. Challan No. Date Amount in Purpose Rs.
1 30094 16-11-2012 15,00,000 Service Tax 2 30030 01-12-2012 7,66,000 Service Tax 3 50041 21-02-2013 3,80,000 Interest 4 50041 21-02013 1,00,000 Late Fees for delay in filing ST-3 Returns She also contended that although the above mentioned facts are not in dispute but still the Revenue has imposed the penalty under Section 78 of the Finance Act, 1994. The Learned Authorised Representative appearing on behalf of the Revenue reiterated the findings recorded in the impugned order and prayed for the dismissal of appeal.
3. I have heard learned advocate for the Appellant and learned Authorised Representative for the respondent and perused the records. It is not in dispute that the entire amount of Service Tax with interest and late fees has been deposited by the Appellant as soon as the Appellant came to know that they are liable to pay the same even without waiting for the show cause notice. There is nothing on record to show that the Appellant have collected the service tax from their customers and retained. It is also on record that that the Appellants have made up the Service Tax liability with interest totally before the issuance of show cause notice. From the above-mentioned facts it is clear that there was no intention to evade the Service Tax liability and the delay in discharge is due to the reasons mentioned in earlier ST/88244/2018 4 paragraph. It could be belated discharge of tax liability by the Appellant. Since the Appellant has discharged the Service Tax liability before the issuance of the show cause notice therefore it is clear that there was no malafide intention. There was bonafide belief which might have made the Appellant not to discharge the tax liability on time. The Appellant is not contesting the issue of payment of duty and interest. I find that there is a reasonable cause for non-payment of service tax by the Appellant and accordingly, the provision of Section 80 of the Finance Act, 1994 can be applied for waiver of penalty under Section 78 ibid of the Finance Act, 1994.
4. In a similar matter, this Tribunal in the matter of M/s Shree Anand Venkateswara Associates vs CCE, Pune-I, reported in 2016- TIOL-1803-CESTAT-Mum, has set aside the penalty under Section 78 and held as under:
"7. I find that it is a fact that though there was clear provision of Service Tax liability on the 'Construction of Residential Complex Services' but the Chamber of the Apex Body i.e. Maharashtra Chamber of Housing and Industry litigated the matter in the court of law. Therefore there was an uncertainty in the minds of the builders, whether during the pendency of the litigation, tax has to be paid. Moreover in the present case the appellant, immediately, on pointing out by the Department, discharged the entire Service Tax liability along with interest.
"Section 73 (3) of the Finance Act, 1994- (3) Where any service tax has not been levied or paid or has been short-lived or short-paid or erroneously refunded, the person chargeable with the service tax, or the person to whom such tax refund has erroneously been made, may pray the amount of such service tax, chargeable or erroneously ST/88244/2018 5 refunded, on the basis of his own ascertainment thereof, or on the basis of tax ascertained by a Central Excise Officer before service of notice on him under sub-section (1) in respect of such service tax, and inform the [Central Excise Officer] of such payment in writing, who, on receipt of such information shall not serve any notice under sub-section (1) in respect of the amount so paid:
Provided that the [Central Excise Officer] may determine the amount of short payment of service tax or erroneously refunded service tax, if any, which in his opinion has not been paid by such person and, then, the [Central Excise Officer] shall proceed to recover such amount in the manner specified in this section, and the period of [thirty months] referred to in sub- section (1) shall be counted from the date of receipt of such information of payment.
From the above provision, it is clear, if the assesee pays the Service Tax along with interest, no show cause notice should be issued. Therefore when show cause notice itself is not warranted, no adjudication is also required and therefore there is no question of imposition of any penalty. Taking into consideration the conduct of the appellant regarding immediate payment of Service Tax along with interest as well as the circumstances that the matter was under litigation in the court of law, the appellant has been able to show the reasonable cause for non-payment of Service Tax in time. It is also noted that the appellant did not try to hide anything, as the data of taxable value was correctly declared by the appellant did not try to hide account. Taking consideration of these factors, I am of the view that the appellant has made out the strong case for waiver of the penalties imposed under Section 77 & 78 invoking Section 73 (3) as well as Section 80 of the Finance Act, 1994. I therefore set aside the impugned order and allow the appeal."
5. Similarly in the matter of M/s Banas Steel Industries vs. CST, Ahmadabad; reported in 2014-TIOL-2501-CESTAT-AHM, the Tribunal has held as under:
"4. Heard both sides and perused the case records. Appellant is not contesting the issue of payment of duty and interest thereon even though according to the appellant they have an arguable case on merits. The contention of the appellant is that the entire amount of tax along with interest was paid as soon as pointed out, therefore, no penalty is imposable as there is no ST/88244/2018 6 fraud, collusion or suppression with intention to evade payment of duty on the part of the appellant. He relied upon the following case law and the CBEC Circulars:-
(a)CCE, Coimbatore vs. Busy Bee & CCE & ST, Chennai- 2014-TIOL-1763-HC-MAD-ST.
(b) M.R. Coatings (P) Limited vs. CCE, Rajkot [(2012) 36 STT 102/22 taxmann.com 223 (Ahmedabad CESTAT)
(c)CCE Rajkot vs. Jai Kishan Engineers- 2013-TIOL-
485-CESTAT-ADM
(d)Shree Rama Multi-Tech Limited vs. Commissioner of Service Tax, Ahmd.- 2011-TIOL-1720-CESTAT-AHM
(e)CST, Bangalore vs. Master Kleen [2012 (25) STR 439 (Kar.)]
(f)CST, Kolkata vs. Gujral Distributors- 2012-TIOL-919- CESTAT-KOL
(g)Paradigm International vs.CCE, Trichy -2011-TIOL- 932-CESTAT-MAD
(h)Margadarsi Marketing (P) Limited vs. CCE, Hyderabad - 2007-TIOL-773-CESTAT-BANG
(i)Gujarat Ambuja Exports Limited vs. UOI [2012 (26) STR 165 (Guj)]
(j)ABB Limited vs. CST Bangalore - 2010-TIOL-1462- CESTAT-BANG
(k)CBEC Circular F.No. 137/167/2006-CX.4 dated 03.10.2017 4.1 It is observed from the case records that appellant is a small time contractor and did not collect the service tax payable from its service recipients. The service tax was paid by the appellant, along with interest, by backward calculation from the total receipts of the contracted price. Learned Authorised Representative could not produce any document from the records that service tax payable was recovered by the appellant separately in the invoices and kept the same with him. In the absence of indication of fraud, suppression etc. with intention to evade payment of duty the case laws relied upon by the ST/88244/2018 7 appellant are applicable to the facts of the present case. Accordingly, appeal filled by the appellant with respect to imposition of penalties is required to be allowed.
5. Appeal filed by the appellant is allowed."
6. In view of the foregoing, the Appeal filled by the Appellant is allowed.
(Operative Part Pronounced in Court on ............ ) (Ajay Sharma) Member (Judicial) arch