Custom, Excise & Service Tax Tribunal
Yes vs Represented By : Shri Vinay Kansara, ... on 28 November, 2014
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad Appeal No. : ST/12026/2013 Arising out of : OIA No. CCEA-SRT-II/SSP-34/2013-14 dated 27.5.2013 Passed by : Commr. (Appeals) C. Excise & Customs, Surat For approval and signature : Honble Mr. H.K. Thakur, 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? No 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 Appellant (s) : M/s. Ajmnani Jaspal Singh Represented by : Shri Vinay Kansara, Advocate Respondent (s) : Commissioner of Central Excise & S.T., Surat
Represented by : Dr. Jeetesh Nagori, A.R. CORAM :
Honble Mr. H.K. Thakur, Member (Technical) Date of Hearing / Decision : 28.11.2014 ORDER No. A/12093 / 2014 Dated 28.11.2014 Per : Mr. H.K. Thakur;
This appeal has been filed by the appellant against OIA No. CCEA-SRT-II/SSP-34/2013-14 dated 27.5.2013 passed by Commissioner (Appeals), Surat-II.
2. Brief facts of the case are that during the course of an audit of M/s. Gujarat Borosil Limited, Bharuch, it was noticed that appellant has provided Rent-a-Cab service to M/s. Gujarat Borosil Limited during the period 01.4.2000 to 31.1.2004. A show cause notice dated 04.2.2005 was issued to the appellant for Rs. 1,17,045/- along with proposed to interest, penalties, which was confirmed by the Adjudicating authority under OIO No. ANK-III/ST/SRM/09/06 dated 21.12.2006 along with interest and penalties were also imposed. On a further remand Adjudicating authority vie OIO No. ANK-III/ST/RSR/07/11-12 dated 12.01.2012 reduced the demand to Rs. 67,996/- along with interest and an equivalent amount of penalty under Section 78 of the Finance Act, 1994 was also imposed. Appellant took this OIO dated 12.1.2012 in appeal and the first appellate authority vide OIA dated 27.5.2013 allowed the appeal of he appellant on penalties under Section 80 of the Finance Act, 1994 but upheld the order of the Adjudicating authority with respect to tax demand and interest. Aggrieved by the order dated 27.5.2013 the present appeal has been filed by the appellant.
3. Shri Vinay Kansara (Advocate) appearing on behalf of the appellant argued that demand is time barred. That the appellant is a poor person, uneducated and is presently doing part-time jobs. That during the relevant period there was a confusion on payment of service tax on Rent-a-Cab service and the appellant was ignorant/ unaware of the service tax provisions. Learned advocate relied upon the following case laws in support of his argument that once Section 80 benefit is given, there is no room for invoking extended period:-
(a) Indian Petrochemicals Corpn. Limited vs. CCE, Vadodara [2009 (237) ELT 317 (Tri. Ahmd.)]
(b) R.N. Singh vs. CCE, Allahabad [2012 (28) STR 13 (Tri. Del.)]
(c) CC & CE vs. Indian Institute of Chemical Technology [2012 (26) STR 97 (AP)]
(d) JAC Air Services Private Limited vs. CST, Delhi [2013 (31) STR 155 (Tri. Del.)]
(e) Ashok Kumar Sharma vs. State of Rajasthan [2013-TIOL-02-SC-NDPS]
(f) Ankleshwar Taluka ONGC Land Loosers Travellers Co.Op vs. CCE, Surat [2013 (29) STR 352 (Guj)]
(g) Solitz Corporation vs. CST, New Delhi [2009(14) STR 642 (Tri. Del.)]
4. Dr. Jeetesh Nagori (AR) appearing on behalf of the Revenue argued that Section 80 of the Finance Act, 1994 even talks of waiving the penalty imposable under Section 78, where elements of fraud, wilful misstatements and suppression etc. with intention to evade tax also exist. It was his case that even after allowing the benefit of Section 80, it can not be said that in all such cases extended period will not be applicable. Learned AR strongly argued that appellant never approached the department that there is any confusion in the tax relating to Rent-a-Cab service. That only through the audit of M/s. Gujarat Borosil Limited it was realised that this appellant is providing taxable service. He relied upon the following case laws in support of his argument that extended period is invokable in this case:-
(a) CC & CE vs. Indian Institute of Chemical Technology [2012 (26) STR 97 (AP)]
(b) Daurala Organics vs. CCE [2014 (35) STR 214 (All.)]
5. Heard both sides and perused the case records. The issue involved in the present proceedings is whether extended period can be invoked in a case where penalty imposition under Section 78 has been waived as per Section 80 of the Finance Act, 1994. Both sides have relied upon conflicting judgments. Honble High Court of A.P. in the case of CC & CE vs. Indian Institute of Chemical Technology (supra) has held that extended period can not be invoked when Section 80 waiver has been granted. On the other hand learned AR relied upon a later judgment of 2014 passed by Allahabad High Court in the case of Daurala Organics vs. CCE (supra) wherein it is held that benefit of Section 80 is not deniable even if extended period is held to be invokable. The period involved in the present proceedings is from 01.4.2000 to 31.1.2004 and show cause notice was issued on 04.2.2005. Relevant Section 80 existing during this period read as follow:-
80.?Penalty not to be imposed in certain cases.-- Notwithstanding anything contained in the provisions of section 76, section 77 or section 78, no penalty shall be imposable on the assessee for any failure referred to in the said provisions if the assessee proves that there was reasonable cause for the said failure. 4.1 Honble Allahabad High Court while deliberating on the issue of Section 80 of the Finance Act, 1994 made the following observations in the case of Daurala Organics vs. CCE (supra):-
15.?Section 80 of the Finance Act, 1994 contains a non obstante provision which begins with the words notwithstanding anything contained in the provisions of Section 76, Section 77 or Section 78. Under Section 80, the burden is cast upon the assessee of proving that there was reasonable cause for the failure referred to in Section 76, 77 or 78, in which event no penalty would be imposable for the failure. The important point to note is that while enacting Section 80, Parliament introduced an overriding nonobstante provision which operates even in relation to the provisions of Section 78. Consequently, the provision envisages that notwithstanding what is contained in Section 78, it is open to an assessee to prove that there was a reasonable cause for the failure attributed in Section 78.
16.?The view which has found acceptance by the Tribunal in the present case is that once the extended period of limitation under Section 73(1) has been applied, there can be no reasonable cause within the meaning of Section 80. Now, the circumstances which have been set out in the proviso to Section 73(1) are indeed similar to those which are set out in Section 78 for the imposition of a penalty. Notwithstanding this, the Parliament did allow to the assessee an opportunity to establish that there was a reasonable cause for the failure and this provision in Section 80, as noted above, overrides Section 78 as well by virtue of the non obstante clause. The non obstante provision of Section 80 must obviously be given a meaning. If the view of the revenue, which was accepted by the Tribunal, were to be affirmed, that would render the non obstante provision of Section 80 otiose. For, it would then have to be held that once a penalty has become imposable under Section 78, it would be inconsistent to allow the assessee to establish that there was a reasonable cause for the failure. The words which have been used in the Statute in the present case in Section 80 cannot be regarded as being redundant or otiose.
17.?Consequently, in our view the Tribunal was in error in coming to the conclusion that there would be no occasion to establish a reasonable cause within the meaning of Section 78, once, the extended period of limitation had been validly invoked under the proviso to Section 73(1). If the analogy which has been used by the Tribunal is extended, it would have to be held that Section 80 would have no application whatsoever to a case which falls within the purview of Section 78 since as we have noted, the language of Section 78 is similar to the language which is used in the proviso to Section 73(1). Accepting such an interpretation would involve re-writing the provisions of Section 80 by excluding the provisions of Section 78 from the nonobstante clause which is contained in Section 80. This would be, in our view, impermissible. In interpreting a fiscal enactment, the duty of the Court is to adopt a plain and a literal construction of the words which have been used by the Legislature.
18.?Significantly, Section 80 was amended by the Finance Act, 2011 (Act No. 8 of 2011). As a result of the amendment, the reference to Section 78 in Section 80(1) has been amended to read as a reference to the first proviso to sub-section (1) of Section 78. Consequently, after the amendment by the Finance Act, 2011, the opportunity which is granted to the assessee to establish a reasonable cause applies to a situation which is governed by the first proviso to Section 78(1). This case, however, deals with a period prior thereto but we have adverted to the subsequent amendment only by way of illustration. 5.2 In view of the above judgment even in the case of where Section 78 is invokable and established the penalty imposed upon an assessee can be set-aside under Section 80 of the Finance Act, 1994 in case it can be proved by an assessee that there was a reasonable cause for failure. Therefore, it can be independently examined whether extended period can be invoked, where waiver of Section 78 penalty upon the appellant is allowed as per the provisions of Section 80 of Finance Act, 1994. The case of Gujarat High Court in the case of Ankleshwar Taluka ONGC Land Loosers Travellers Co.Op vs. CCE, Surat (supra) relied upon by appellant was different on facts. There was a written contract between M/s. ONGC and that appellant having no service tax clause. M/s. ONGC refused to pay tax to the appellant in that case. It was specifically brought to the notice of High Court that in those circumstances the service tax could not be deposited in time. In the present case before this bench, no written contract is produced to indicate that service tax clause was not there. There is also no indication that M/s. Gujarat Borosil Limited refused to pay service tax to the appellant. There is also no evidence that appellant had any confusion that service tax payment on Rent-a-Cab services was disputable. Appellant preferred to sit quiet with his eyes closed. In the present case the entire demand is not time barred and appellant has not shown his bonafides by paying the service tax along with interest for the period within limitation period. Appellant is not able to convince the Bench, with any documentary evidence that there was any confusion in his mind regarding non payment of service tax.
5. In view of the above it is held that extended period is applicable in the present appeal even if waiver from Section 78 penalty has been extended to the appellant under Section 80 of the Finance Act, 1994.
6. Appeal filed by the appellant is rejected.
(Operative part of the order pronounced in the Court) (H.K. Thakur) Member (Technical) .KL 7