Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs Vrl Logistics Ltd on 21 January, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order No. 20073 / 2014 Appeal(s) Involved: ST/188/2007-SM [Arising out of Order-in-Appeal No. 58/2007 dated 15/02/2007 passed by the Commissioner of Central Excise(Appeals) Mangalore] Commissioner of Central Excise, Customs and Service Tax - BELGAUM NO. 71...CLUB ROAD, CENTRAL EXCISE BUILDING, BELGAUM, KARNATAKA-590001 Appellant(s) Versus VRL LOGISTICS LTD. P B ROAD, VARUR HUBLI Respondent(s)
Appearance:
Mr. A.K. Nigam, A.R. For the Appellant M. N. Anand, Adv For the Respondent CORAM:
HONBLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER Date of Hearing: 21/01/2014 Date of Decision: 21/01/2014 There was a dispute between the Revenue and the assessee as to whether the assessee is required to pay service tax in respect of courier service rendered to the customers wherein there was no movement of time sensitive articles from door to door. Issue was finally settled by the Honble Supreme Court in Civil Appeal No. 6687/2005. The decision was rendered on 21.11.2005. During the period when the matter was under litigation, the assessee was not paying service tax on such services. It is the submission of the learned counsel that they were not collecting the same also. After the issue was decided in November 2005, since the appellant did not pay the service tax for the period from April 2004 to March 2005, proceedings were initiated by issuing show-cause notice on 21.6.2006. In July 2006, the appellant paid the entire amount of service tax with interest. The original adjudicating authority imposed penalty under Section 76 of the Finance Act 1994 which has been set aside by the Commissioner (Appeals) after invoking provisions of Section 80 of the Finance Act 1994. Revenue is in appeal against the setting aside of the penalty by the Commissioner.
2. I find that in the appeal memorandum, the ground for taking a view that penalty should have been imposed is in para 11 which is reproduced below:
The said delay in payment of service tax on the part of the assessee in spite of the decision of the Apex Court being accorded in favour of the department shows the willful intention of the assessee from the very beginning not to comply with the tax liabilities in spite of the Apex Courts decision and to withhold payment of service tax to gain undue financial accommodation. The shelter taken by the assessee that they had a genuine and bonafide doubt of taxability of service which resulted in delay in making payment of service tax is not acceptable in as much as they were fully aware of the taxability of the service at least after the decision given by the Apex Court. On the other hand the Commissioner also has given some reasons for coming to the conclusion as to why he does not consider that penalty should be imposed. Relevant paragraph is reproduced below:
I find that the original authority has sought to impose penalty under Section 76 on the ground that the appellants have failed to discharge their tax liability even after the issue was settled by the Apex Court. I do not accept this reasoning. Delay in making payment of duty attracting penalty under Section 76 is condonable in terms of Section 80 if the appellants have a reasonable cause for not making the payment. They were of the view that part of services rendered by them was not liable to tax. The decision of Apex court dated 21.11.2005 finalizing the dispute having a bearing on liability between April 2004 and April 2005 cannot be a basis for employing Section 76. The delay was already committed under a bonafide belief that tax was not payable when the Apex Court passed its order. Hence the failure to collect and remit Service Tax is condonable. There is no reason to change the ground adopted in Orders-in-appeal No. 204/2005, 205/2005 both dated 28.09.2005 and 142/2006 dated16.05.2006 for setting aside the penalty under Section 76.
3. The very fact that the matter went right up to the Supreme Court and finally it was decided against the assessee shows that assessee definitely felt that they had a case for non-payment of service tax. That being the position, I am unable to agree that there was willful intention on the part of the assessee not to comply with tax liabilities. When the counsel was enquired as to why there was delay even after the decision of the Supreme Court, learned counsel submitted that appellant had some financial difficulty and they had not collected the tax and hence there was some delay. In any case intention to evade duty and suppression of facts etc. have not been invoked specifically in the show-cause notice and penalty under Section 78 of Finance Act 1994 has also not been proposed. Under these circumstances I consider that the appellants submission that reasonable cause for delay in payment of tax and Commissioner (Appeals) was right in not imposing penalty by invoking provisions of Section 80 of the Finance Act. Even though the learned counsel pleaded that cross-objection had been filed, he was not able to give the number allotted to the same. In any case since the matter is being decided in favour of the assessee it is not necessary to go into this issue any further. In the result appeal filed by the Revenue has no merit and is accordingly rejected.
4. Even though the cross-objection has not been numbered and not listed, the learned advocate insisted that the same should be considered as an appeal filed by them. Even though, I consider that in the absence of a number being given to the cross-objections and in the absence of its listing, I am not required to consider the cross-objections, yet in the interest of justice, I proceed to deal with the issue raised by the learned counsel. Learned counsel submitted that the entire demand is time barred and has to be set aside. It is his submission that the show-cause notice did not invoke the extended period. Therefore, the demand as well as the interest which is upheld by the original adjudicating authority could not have been upheld. First of all, this issue was never raised before the original adjudicating authority or before the Commissioner (Appeals) and is being raised for the first time before me in the cross-objections. On this ground itself, claim has to be rejected.
5. Secondly, when the matter is under litigation and it attained finality there is an obligation on both sides to implement the final decision. Expecting a show-cause notice to be issued for implementing the decision of the Honble Supreme Court and claiming that the show-cause notice is barred by time when Honble Supreme Court has held that tax was leviable to be paid, in my opinion amounts to not obeying the law of the land. On this ground, the respondent has no case against the confirmation of demand and interest. The next submission was that no suppression was invoked. The learned A.R. submitted that in the show-cause notice, Section 73(1)(a) of Finance Act 1994 has been invoked and this is sufficient. I find that the show-cause notice, has already given the ground for the demand and as to the fact that the matter had reached the Honble Supreme Court and as per the Honble Supreme Court, the demand was being raised. Moreover it has also been indicated in paragraph-4 that the appellant had given the details of the amount received for the services rendered during the period from April 2004 to March 2005 in their letter dated 09.08.2005. On this basis, the service tax was calculated. This shows that in the returns filed, the details were not submitted and the appellants had given the details only on 9.8.2005. After the Supreme Court decision was received, it would be natural for the department to expect that assessee would pay the service tax but when they did not pay, notice has been issued. When the facts in paraprah-4 clearly indicate that the details were submitted only in August 2005 and apparently, it is not the claim of the assessee that they had furnished the details at any stage till now, nor was it made clear before me. By this, the conclusion would be that the requirement of law to declare the amounts received for services rendered has not been fulfilled. The facts as emerging from paragraph-4 in my opinion would be sufficient to conclude that the department is informing the assessee of the statutory requirement. It has to be noted that we are in a self-assessment regime and nobody can claim that they are ignorant of law and procedure since if he is ignorant naturally he cannot do self-assessment and pay the tax which is the requirement of law. Once the assessee is required to do assessments and pay the tax, it cannot be said that he is not aware of the obligation of self-assessment and the consequence of its failure to follow the law. Therefore, if the facts are briefly explained in the notice and the relevant sections are invoked and if the demand has been issued beyond one year any prudent assessee would have to conclude that extended period is being invoked in this case. Therefore, I am unable to accept the view and the submissions made by the learned counsel that show-cause notice has to be considered as time barred and demand itself has to be held as unsustainable and create another round of litigation by holding that the amount paid by the appellant was not payable leading to refund claim and subsequent litigation on the same. In view of the above discussion, I do not find any merit in the un-numbered cross-objection.
6. The last ground taken by the learned counsel is that there are four decisions wherein a view has been taken that the ground of limitation can be raised at any stge. I find that in all these cases, matter was being dealt in cases of appeal filed by the parties and not when cross-objection was filed. Therefore, I find that none of these decisions can be applied to the facts of this case since I am not dealing with an appeal filed by the assessee. The matter is being dealt on an appeal filed by the Revenue. Further, the question is also not raising an additional ground before the Tribunal. It is to be remembered that when Commissioner (Appeals) has decided in favour of the appellant, they were not in appeal. Before the original adjudicating authority also the issue was whether the penalty is liable to be imposed or not. Under these circumstances, since the facts of the case are entirely different and ratio of any decision before being made applicable in any other case, has to be seen in the light of facts of the case and the facts of the case before me. Since the facts of the case are entirely different, I find that these decisions are not applicable.
(Order dictated and pronounced in open court) B.S.V MURTHY TECHNICAL MEMBER Pnr....
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