Custom, Excise & Service Tax Tribunal
Avtar Krishan Mittal vs Cce, & St Chandigarh-I on 15 December, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SCO 147-148, SECTOR 17-C, CHANDIGARH 160 017
COURT NO. II
APPEAL NO. ST/814/2009
[Arising out of Order-in-Appeal No. 276/CE/CHD-I/09 dated 28/07/2009 passed by the Commissioner of Central Excise (Appeals), Chandigarh-I.]
Date of hearing: 02.11.2016
Date of decision:15.12.2016
For approval and signature:
Honble Mr. Devender Singh, Member (Technical)
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Avtar Krishan Mittal :
Appellant(s) VS CCE, & ST Chandigarh-I :
Respondent(s) ======================================================= Appearance:
Sh. Rajnish, Advocate, for the Appellant.
Sh. V. Gupta, A.R for the Respondent.
CORAM:
Honble Mr. Devender Singh, Member (Technical) FINAL ORDER NO. 61702/2016 Per : Devender Singh The appellants have preferred this appeal against the Order-in-Appeal No. 276/CE/CHD-I/09 dated 28/07/2009 passed by the Commissioner of Central Excise (Appeals), Chandigarh-I.
2. Brief facts of the case are that the noticee is engaged in the business of renting of cabs to BSNL offices. On the basis of an information that they were evading Service Tax, an investigation was started and they were summoned four times but the noticee failed to respond or produce the required records. It was only 16.11.2007 that the noticee appeared before the Central Excise Authorities and submitted the Balance Sheets of his firm for the year ending 31.03.2003, 31.03.2004, 31.03.2005, 31.03.2006 and 31.03.2007. However he did not submit any bill issued to his clients. The relevant information was collected by investigating officers from various BSNL offices based on which a show cause notice was issued.
3. The Ld. Counsel for the appellants submits that they are only contesting the imposition of penalty and are not contesting the confirmed demand. He submitted that there was no malafide intention and the short payment was due to genuine calculation errors. During the December, 2002 to March, 2007, there was change in service tax rates four times due to which there were calculation errors in tax cess, abatement and cum duty valuation. In this regard, he relied upon the judgment of this Tribunal in the case of Delhi Tourism & Transportation Dev. Corpn. Vs. CCE, Delhi-I 2007 (7) S.T.R. 202 (Tri. Del.). Alternatively, he pleaded, that if a penalty was to be imposed, they should be given an option of paying 25% of the duty as penalty, because the Adjudicating Authority did not give such an option. In this regard, he relied upon the judgment of Honble High Court of Gujarat in the case of Ratnamani Metals and Tubes Ltd. Vs. CCE, Ahmedabad -III- 2013 (296) E.L.T. 327 (Guj.).
4. The Ld. A.R. stated that it was a clear case of suppression since four summons were issued to the appellant between 28.02.2006 and 25.07.2007 to appear before the investigating officers, which they did not comply. It was only on 16.11.2007 that he appeared. He submitted copies of balance sheets but not the bills/bill books issued to the clients. Investigating officers had to obtain information from various BSNL officers located in Punjab, Haryana and Himachal Pradesh and the Union Territory of Chandigarh. It was on the basis of copies of agreements, bills and ledger accounts collected by the department that the demand was calculated. The amounts received from the BSNL and the ones shown in the balance sheets did not match. As such, the suppression and intent to evade service tax were rightly upheld by the Adjudicating Authority and the Commissioner (Appeals).
5. After hearing the parties and examining the records, I find that the noticee has deliberately been avoiding to present his financial records before the authorities. The noticee did not join the investigation, did not submit basic records like bill books, ledger, accounts books which indicates that information was deliberately withheld from the authorities with an intent to evade the tax. As per the agreement, payment of services by BSNL was made on pre-receipted bills complete in all records. Despite such elaborate system, the appellants did not provide the required information to calculate the tax. It was obtained by authorities from BSNL offices. The amounts received from BSNL and the amounts in balance sheets did not match. The Commissioner (Appeals) has rightly concluded that appellants provided service to the other customers but did not declare the same in ST-3 returns. It is therefore evident that the appellants have resorted to suppression with an intent to evade service tax. As for the plea of the appellants that there were calculation errors and change of duty, given the above finding of deliberate suppression, the plea of calculation errors and bona fide mistake is not tenable. In any event, it was responsibility to the appellants to calculate and apply the rate correctly. In the case of Delhi Tourism and Transportation (supra) cited by the party, the penalty was not imposed as the appellants in that case was a public sector undertaking, which is not the case in the instant appeal. Therefore, the penalty has been correctly upheld by the First Appellate Authority.
6. As for the option of 25% of penalty within 30 days, the Adjudicating Authority has not given that option to appellants. The appellants have relied upon the judgment of Gujarat High Court in the case of CCE, Ahmedabad-III Vs. Ratnamani Metals And Tubes Ltd. (supra), praying that they be given the benefit of reduced penalty.
7. I find that the question of reduced penalty by the Tribunal was examined by this Tribunal in BSL Vs. CCE, Jaipur-II 2016 (44) STR 419 (Tri-Del), wherein it was held as under:-
Thus, in the appellants own case involving similar demand, penalty under Section 76 ibid was set aside and option to pay reduced (25%) mandatory penalty was extended. At this juncture, it is pertinent to mention that the appellant is located in Rajasthan, which is neither under the jurisdiction of Gujarat High Court nor under the jurisdiction of Delhi High Court. Therefore, notwithstanding the judgment of Delhi High Court in the case of Pr. CST-II v. Top Security Ltd. (supra), we would have been inclined to follow the judgment of Gujarat High Court in the case of Ratnamani Metals & Tubes (supra) [2013 (296) E.L.T. 327 (Guj.)], more so because it has already been followed in respect of a similar demand in the appellants own case and given an option to pay reduced (25%) reduced mandatory penalty. However, we find that Delhi High Court in the case of Pr. CST-II v. Top Security Ltd. (supra), took note of the Gujarat High Court judgment in the case of Ratnamani Metals & Tubes (supra), and differed therefrom. We agree that that would not render Gujarat High Court order invalid as one High Court cannot overrule judgment of another High Court. But in the case of CCE, Surat v. Rajeshree Dyg. & Ptg. Mills (P) Ltd. [2014 (305) E.L.T. 442 (Guj.)] passed by Gujarat High Court after the judgment in the case of Ratnamani Metals & Tubes (supra). Gujarat High Court itself changed its view and in effect held a view similar to that held by Delhi High Court in the case of Pr. CST-II v. Top Security Ltd. (supra). Review petition against the said judgment was dismissed by the Supreme Court as reported in E.L.T. quoted below :-
Penalty - Tribunal not justify in extending benefit of reduced penalty of 25% when duty, interest and penalty not deposited either before raising of demand or within 30 day of adjudication order.
The Supreme Court Bench comprising Honble Mr. Justice Anil R. Dave and Honble Mr. Justice Adarsh Kumar Goel on 3-12-2015 dismissed the Review Petition (Civil) No. 3536 of 2015 in Civil Appeal No. 36137 of 2013 filed by Rajshree Dyg. & Pt. Mills (P) Ltd. against Order and Judgment dated 18-9-2015 passed in Petition for Special Leave to Appeal (C) No. 36137 of 2013 as reported in 2016 (331) E.L.T. A132 (S.C.) (Rajashree Dyg. & Ptg. Mills Ltd. v. Commissioner). While dismissing the petition, the Supreme Court passed the following order :
Application for oral hearing is rejected.
We have perused the Review Petition and record of the Special Leave Petition and are convinced that the judgment of which review has been sought does not suffer from any error apparent warranting its reconsideration.
The Review Petition is, accordingly, dismissed. The Supreme Court in its impugned order had dismissed Special Leave Petition filed against the order of the Gujarat High Court reported in 2014 (305) E.L.T. 442 (Guj.), wherein it was held that the benefit of reduced penalty of 25% imposed under Section 11AC of the Central Excise Act, 1944 could not be extended by the Tribunal inasmuch as the assessee had neither paid duty, interest along with penalty prior to raising demand nor within 30 days of finalisation of demand by the adjudicating authority. Even after passing of order by the Commissioner (Appeals), who confirmed the demand and interest, the assessee did not pay any amount.
[Rajshree Dyg. & Ptg. Mills (P) Ltd. v. Commissioner - 2016 (332) E.L.T. A41 (S.C.)]. In the foregoing circumstances, Gujarat High Court judgment in the case of Ratnamani Metals & Tubes (supra), no longer remains good law and therefore, can no longer be followed while the law laid down by Gujarat High Court in the case of Rajshree Dyg. & Ptg. Mills (P) Ltd. v. Commissioner (supra), and Delhi High Court in the case of Pr. CST-II v. Top Security Ltd. (supra), becomes good and binding law to be followed. In the light of the above, the benefit of reduced mandatory penalty cannot be extended to the appellants.
8. In the result, the appeal is dismissed.
(Order pronounced in the court on 15.12.2016) Devender Singh Member (Technical) NS 6 ST/814/2009-CHD