Custom, Excise & Service Tax Tribunal
M/S Capgemini India Pvt Ltd vs Commissioner Of Central Excise, Pune-I on 9 January, 2017
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. I APPLICATION NO. ST/EH/93361/16 IN APPEAL NO. ST/89297/13-MUM (Arising out of Order-in-Original No. PUN-EXCUS-001-COM-012-13-14 dated 31st July 2013 passed by the Commissioner of Central Excise, Pune-I.) For approval and signature: Honble Shri M V Ravindran, Member (Judicial) Honble Shri C J Mathew, Member (Technical) =====================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ===================================================== M/s Capgemini India Pvt Ltd Appellant Vs Commissioner of Central Excise, Pune-I Respondent Appearance: Shri Prasad Paranjape, Advocate for Appellant Shri A B Kulgod, Assistant Commissioner (AR) for Respondent CORAM: HONBLE SHRI M V RAVINDRAN, MEMBER (JUDICIAL) HONBLE SHRI C J MATHEW, MEMBER (TECHNICAL) Date of Hearing: 09.01.2017 Date of Decision: 09.01.2017 ORDER NO. Per: M V Ravindran:
Miscellaneous application no. ST/EH/93361/16 is filed for out of turn hearing of the appeal on the ground that the issue is covered by various decisions. After hearing both sides, we find that the issue in this appeal is regarding the penalties imposed by the adjudicating authority. Accordingly, we allow the application for out of turn hearing of the appeal. As the issue involved in this case is in a narrow compass, we take up the appeal for disposal.
2. This appeal is directed against Order-in-Original No. PUN-EXCUS-001-COM-012-13-14 dated 31st July 2013.
3. Heard both sides and perused the records.
4. The issue involved in this case is regarding the Service Tax liability on the services availed by the appellant from its group companies during the period March 2010 to March 2012 and paid the said amount to group companies. During the course of audit conducted by the Revenue this error of non-discharge of Service Tax liability was pointed out, which was accepted by the appellant and paid the tax with applicable interest and also availed the CENVAT credit of Service Tax paid by them; as the said services were utilised for providing output taxable services, which are exported and the said credit so availed has not been objected. Appellant filed a letter dated 12th July 2012 seeking closure of proceedings under Section 73(3) of the Finance Act, 1994. Revenue chose to carry this matter further by issuing show-cause notice dated 13th March 2013 which was adjudicated and by the impugned order imposed the penalties of Rs. 25,000/- under Section 77 and Rs. 87,52,843/- under Section 78 of the Finance Act, 1994. It is undisputed that the amount of Service Tax liability under the reverse charge mechanism along with interest, on being pointed out by the audit party, has been paid by the appellants. In our considered view, provisions of Section 73(3) would directly apply the case in hand. The appellants letter dated 12th July 2012 vide which they informed the department for closure of proceeding, also sought the invocation of provisions of Section 73(3). Despite such clear provisions made under Section 73(3), show-cause notice was issued by the Revenue authorities, which in our view is unwarranted in the given circumstances. The provisions of Section 73(3) are very clear, provides for non-issue of show-cause notice if Service Tax liability along with interest is discharged by the assessee on being pointed out by the Officer. In our considered view Revenue authorities have misdirected themselves by wrongly issuing notice and not following the provisions of Section 73(3) in this case. We find that a similar issue as to invocation of provisions of Section 73(3) of Finance Act, 1994 was before Hon'ble High Court of Karnataka in the case of CCE & ST, LTU, Bangalore Vs Adecco Flexione Workforce Solutions Ltd 2012 (26) STR 3 (Kar.), wherein the Lordships held as under.
1. Both these appeals are preferred by the assessee challenging the order passed by the Tribunal as well as the Appellate Commissioner who have held that the assessee is not liable to pay any penalty under Section 76 of the Finance Act, 1994 and therefore, set aside the order passed by the lower authorities imposing penalty.
2.?Facts are not in dispute. The assessee has paid both the service tax and interest for delayed payments before issue of show cause notice under the Act. Sub-sec. (3) of Section 73 of the Finance Act, 1994 categorically states, after the payment of service tax and interest is made and the said information is furnished to the authorities, then the authorities shall not serve any notice under sub-sec. (1) in respect of the amount so paid. Therefore, authorities have no authority to initiate proceedings for recovery of penalty under Sec. 76 of the Act.
3.?Unfortunately the assessing authority as well as the appellate authority seem to think. If an assessee does not pay the tax within the stipulated time and regularly pays tax after the due date with interest. It is something which is not pardonable in law. Though the law does not say so, authorities working under the law seem to think otherwise and thus they are wasting that valuable time in proceeding against persons who are paying service tax with interest promptly. They are paid salary to act in accordance with law and to initiate proceedings against defaulters who have not paid service tax and interest in spite of service of notice calling upon them to make payment and certainly not to harass and initiate proceedings against persons who are paying tax with interest for delayed payment. It is high time, the authorities will change their attitude towards these tax payers, understanding the object with which this enactment is passed and also keep in mind the express provision as contained in sub-sec. (3) of Sec. 73. The Parliament has expressly stated that against persons who have paid tax with interest, no notice shall be served. If notices are issued contrary to the said Section, the person to be punished is the person who has issued notice and not the person to whom it is issued. We take that, in ignorance of law, the authorities are indulging in the extravaganza and wasting their precious time and also the time of the Tribunal and this Court. It is high time that the authorities shall issue appropriate directions to see that such tax payers are not harassed. If such instances are noticed by this Court hereafter, certainly it will be a case for taking proper action against those law breakers.
4.?In that view of the matter, we do not see any merit in these appeals. The appeals are dismissed.
5.?Mark a copy of this order to the Commissioner of Large Tax Payers Unit who is in charge of collection of service tax to issue proper circular to all the concerned authorities, not to contravene this provision, namely sub-section (3) of Section 73 of the Act.
5. In view of the facts and circumstances of this case and the authoritative judicial pronouncement by Hon'ble High Court of Karnataka, we hold that the impugned order to the extent it imposes the penalty on the appellant under Section 77 and 78 of Finance Act, 1994, is unsustainable and liable to be set aside and we do so. The impugned order is set aside to the extent, which is challenged before Tribunal. The appeal is disposed of as indicated hereinabove.
(Pronounced in open Court) (C J Mathew) (M V Ravindran) Member (Technical) Member (Judicial) Sp ST/EH/93361/16 2