Custom, Excise & Service Tax Tribunal
Cce, Lucknow vs M/S. Sharda Steel Industries Ltd on 24 September, 2009
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
West Block No.2, R.K.Puram, New Delhi-110066.
Principal Bench, New Delhi.
ST/563/09-SM
(Arising out of Order-in-Appeal No.14-ST/LKO/2008 dt.30.1.09 passed by the Commissioner(Appeals), Lucknow)
CCE, Lucknow Appellant
Versus
M/s. Sharda Steel Industries Ltd. Respondent
Appearance Sh. Sansar Chand, DR For Appellant Shri Bipin Garg, Adv. for Respondent Coram: Honble Mr. RAKESH KUMAR, MEMBER (TECHNICAL) Date of Hearing: 24.9.09 Order No.____________________ Per Rakesh Kumar:
This is an appeal by Revenue against order-in-appeal No.14-ST/LKO/2008 dt.30.1.09 passed by Commissioner(Appeals). The facts of the case, in brief, are that while the service tax on Good Transport Agency was introduced from 1.1.05 and in terms of Notification No.35/2004-ST dt.3.12.04 read with Rule 2(1)(d) of Service Tax Rules,1994 in case of certain categories of receivers of GTA service, the service tax was to be paid by the service recipients. There is no dispute that the respondent in terms of said notification would liable to pay service tax on GTA service received by them w.e.f. 1.1.05. It appears that the respondent paid certain amount of service tax only for the month of Jan. & Feb05 and thereafter challenged this levy by filing a writ petition before Honble Allahabad High Court. Honble Allahabad High Court granted stay on collection of service tax in March05, but Honble High Court dismissed the writ petition on 12.8.05. The respondent however, still did not start the payment of service tax and paid the balance amount of service tax for Jan05 to March06 period only on 31.3.06 and, thereafter, they paid interest on this service tax sometime in July07. The Deptt., however, issued a SCN on 24.10.07 for imposition of penalty on the appellant under Section 76 for non-payment of service tax during Jan05-March06 period by the due date. The Asstt. Commissioner vide order-in-original dt.29.4.08 imposed the penalty of Rs.2,93,698/- under Section 76 which is at the rate of Rs.200/- per day subject to the ceiling of the non-paid tax. The respondent filed an appeal before the Commissioner(Appeals) who vide order-in-appeal dt.30.10.09, set aside the penalty on the ground that the respondent is eligible for waiver of penalty in terms of the provisions of Section 80 of the Finance Act,1994, which provides that notwithstanding anything contained in the provisions of Section 76, 77 & 78, no penalty shall be imposable on an assessee for failure referred to in the said provisions, if assessee proves that there was reasonable cause for the said failure. The Commissioner(Appeals) took the view that because of challenge on levy before Honble Allahabad High Court, which was decided by the Honble High Court on 12.8.05 against the respondent, there was reasonable cause for non-payment of service tax during Jan05 30.3.06 period. It is against this order of the Commissioner(Appeals) that the present appeal has been filed by the Revenue.
2. Heard both sides.
2.1 Shri Sansar Chand, Ld. DR pleaded that even though there may be a reason for non-payment when the matter was before Honble Allahabad High Court, once the matter was decided by Honble Allahabad High Court on 12.8.05, there was no reason for the respondent for continued non-payment; that the respondent atleast should have started payment of service tax by due date from Sept05 onwards; that in respect of the period from Sept05 onward, the respondent have failed to show that there was any reasonable cause for non-payment of service tax by due date and that in view of this, Commissioner(Appeals)s waiving the penalty under Section 76 by invoking the provisions of Section 80 is not correct.
2.2 Shri Bipin Garg, Advocate, ld. Counsel for the respondent pleaded that some amount of service tax pertaining to Jan.-Feb05 was paid in March05, when the respondent decided to challenge the levy before Honble Allahabad High Court and filed a writ petition before Honble Allahabad High Court, that the Honble High Court stayed levy and collection by an order passed in March05; that the matter was decided against the respondent on 12.8.05, that the respondent had consulted some Counsels for filing SLP to Honble Supreme Court which took sometime and that when the respondent was advised by the Counsel not to challenge, only then they paid the entire amount on 31.3.06; that there was sufficient cause for non-payment of service tax by due date during the period of dispute and hence Commissioner(Appeals) has rightly waived the penalty under Section 76 by invoking Section 80; and that the judgments of the Tribunal in the case of K.G. Somani & Co. vs Commissioner of Service Tax, Delhi reported in 2007(5)STR.418(Tri.-Del.) and of Larger Bench of the Tribunal in the case of Eta Engineering Ltd. vs CCE, Chennai reported in 2004(174)ELT.19(Tri.-LB) are squarely applicable to the facts of this case. He also pleaded that the SCN has been issued after more than 1= years after the period of dispute which is not in accordance with the ratio of the judgment of the Honble Supreme Court in the case of Commissioner vs T.V.S.Whirpool Ltd. reported in 2000(119)ELT.A177(SC) wherein Honble Supreme Court held that limitation period applicable for the payment of principal amount i.e. duty, would also apply for recovery of the interest on duty. He pleaded that the ratio of this judgment would be equally applicable for initiating the penal proceedings. He also pleaded that the calculation of penalty is also wrong and same has been imposed even for the period of stay.
3. I have carefully considered the submissions from both the sides and perused the records. The levy was effective from 1.1.05 and in March05, on a writ petition having been filed by the respondent before Honble Allahabad High Court, the levy and collection was stayed. However, the respondents writ petition was decided against them on 12.8.05. Even if margin of about one and half month the time limit for filing appeal to Honble Supreme Court is given to the respondent for consulting their Counsels for going to Honble Supreme Court atleast from Oct05, there is no reason for confirmed non-payment of service tax. The provisions of Section 76 are attracted whenever there is non-payment of service tax by due date and the only situation in which the penalty under Section 76 can be waived is that mentioned in Section 80 which provides that notwithstanding anything contained in the provisions of Section 76, 77 & 78, no penalty shall be imposable on the assessee for any failure referred to the said provisions, if the assessee proves that there was reasonable cause for the said failure.
4. From the wordings of Section 80, it is clear that waiver of penalty can be granted only if there was a reasonable causefor failure referred to in Section 76, 77 & 78. In this case, when the matter was decided by the Honble Allahabad High Court against the respondent on 12.8.05 and giving margin one and half month for consultation, atleast from Oct05 onwards, there was no reasonable cause for non-payment of tax by the due date. In cases of Eta Engineering Ltd.(supra) and K.G.Somani & Co.(supra) cited by Ld. Counsel for respondent, the period of dispute during which non-payment had occurred was much prior to the date on which the matter had been finally decided against the appellant and hence the judgments of the Tribunal in these cases are not applicable to the facts of the case. As regards Honble Supreme Courts judgment in the case of Commissioner vs T.V.S. Whirpool Ltd.(supra) cited by Ld. Counsel, the same is with regard to the applicability of limitation period for recovery of interest on duty. Penalty is something totally different and hence this judgment of Honble Supreme Court is also not applicable to the issue involved in this case.
5. Since as discussed above, from Oct05 onwards, there was no reason for non-payment of service tax by due date, I hold that the respondent would be liable for penalty for period from 5.10.05. However, looking to the circumstances of the case, I hold that penalty of Rs.100/- per day for the period from 6.10.05 onwards till the date of its payment will meet the ends of justice. In view of the above discussion, the impugned order is set aside and the order-in-original is restored with the above mentioned modification. The Revenues appeal is partly allowed.
Order dictated in the open Court.
(Rakesh Kumar) Member Technical km ??
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