Custom, Excise & Service Tax Tribunal
M/S. Kalbhor Construction Co vs Commissioner Of Central Excise, Pune I on 27 September, 2016
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
Appeal No.
ST/458, 459/12
(Arising out Order-in- Appeal No. P-I/RKS/86-87/2012 dated 28.03.2012 passed by the Commissioner of Central Excise (Appeals), Pune I)
For approval and signature:
Honble Shri M.V. Ravindran, Member (Judicial)
Honble Shri Raju, 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 Yes
of the Order?
4. Whether Order is to be circulated to the Departmental Yes
authorities?
M/s. Kalbhor Construction Co.
Appellant
Vs.
Commissioner of Central Excise, Pune I
Respondent
Appearance:
Mr. Patankar, Consultant for the appellant Shri A.B. Kulgod, AC (AR) for the respondent CORAM:
Honble Shri M.V. Ravindran, Member (Judicial) Honble Shri Raju, Member (Technical) Date of hearing : 07-09-2016 Date of decision : 27.09.2016 O R D E R No: ..
Per: Raju The appellants were issued show-cause notices for default in payment of duty. The facts of the first case are as follows:- a. Default period : First half of the Financial year 2005-2006 (October 2005 to March 2006) b. Visit of the jurisdictional officers on 01/09/2006 c. Payment of balance amount with interest on 15.09.2006 The delay for the Q-Oct 2005 - Dec 2005: 8 months and the delay for Q- Jan 2006 March 2006 : 5 months d. Show-cause notice F.no. VGN (30) CCS/012/STC/PI/IV dated 25.03.2010 The facts of the second case are as follows:-
a. Default period : First half of the Financial year 2008-2009 (April 2008 to Sept. 2008) b. Visit of the jurisdictional officers on 15/10/2008 c. Payment of balance amount with interest during Oct. to Dec 2008 The delay for the Q- Apr 2008 June 2008: 6 months and the delay for Q- July 2008 Sept.2008 : 3 months d. Show-cause notice F.no. VGN (30) CCS/012/STC/PI/IV dated 25.03.2010
2. The case was adjudicated by the lower authorities. The original adjudicating authority confirmed the demand of duty and interest and imposed penalty and appropriated the amounts already paid. The notice also imposed penalty under Section 76 and 77. However, no penalty was imposed under Section 78. The matters were agitated by the appellant as well as the revenue before the Commissioner (Appeals), who disposed of the matter by upholding the demand of duty and interest and penalty under Section 77. However, he on revenues appeal set aside the penalty under Section 76 and imposed equivalent penalty under Section 78 of the Finance Act, 1994. Aggrieved by the said orders, appellants are before the Tribunal.
3. Ld. counsel for the appellant argued that the ingredients for the invocation of Section 78 of the Finance Act, 1994 are not present in the instant case and therefore penalty under Section 78 cannot be imposed. He argued that since they had paid the duty voluntarily before issue of show-cause notice the proceedings against them should have been concluded in terms of Section 73(3) of Finance Act, 1994. He further prayed that benefit of waiver of penalty under Section 78 by invocation of section 80. He also sought option to pay reduced 25% as provided under first proviso to Section 78.
4. Ld. AR relied on the impugned order. He further relied on the decision of the Hon'ble High Court of Gujarat in the case of IWI Crogenic Vaporization System (India) Pvt. Ltd. 2016-TIOL-350-HC-AHM-ST. He argued that in the instant case the appellant had collected the service tax but not deposited the same and therefore it amounted to bringing the contravention of the Finance Act, 1994 with intent to evade payment of duty.
5. We have gone through rival submissions. Ld. counsel has relied on the decisions of Vista Infotech 2010 (17) STR 343 wherein identical circumstances the Tribunal had held that when service tax is paid before issue of show-cause notice and it is attributable to financial crunch, benefit of Section 73(3) could be allowed. We find that revenue has relied on decision of Hon'ble High Court of Gujarat in the case of IWI Crogenic Vaporization System (supra) wherein the High Court has observed as under:-
5. It can thus be seen that the Tribunal came to the factual finding that the assessee had recovered service tax from service recipients. The assessee was also registered with the Central Excise Department for providing several services including the service in question on which service tax was required to be paid on reverse charge basis. It was held that having collected such tax from the service recipients and having been registered in respect of such service, the assessee was required to pay service tax to the Excise Department. The assessee had not filed requisite periodical returns and the fact of non payment of service tax came to light of the Department only as a result of special investigation. The Tribunal also noted that assessee had not pleaded any case of financial hardship.
6. We find that the decision of the Hon'ble High Court has been given in circumstances where the appellant had not filed the requisite periodical returns and the fact of non-payment of service tax came to light only on the result of special investigation. In the instant case, appellant has been filing regular returns and therefore there could not have been any specific intention to evade duty. In these circumstances, the decision of the Hon'ble High Court of Gujarat is distinguishable. Relying on the decision of the Tribunal in Vista Infotech (supra) we hold that the penalty under Section 78 is unwarranted and the same is set aside. However, penalty under Section 77 is upheld.
7. The appeals are partly allowed in above terms.
(Pronounced in Court on ...............................) (M.V. Ravindran) Member (Judicial) (Raju) Member (Technical) //SR
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