Custom, Excise & Service Tax Tribunal
Virtual Marketing (India) Pvt Ltd vs Commissioner Of Service Tax, Mumbai on 4 May, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. ST/146/08 [Arising out of Order-in- Original No. 28/COMMR(AK)/08 dated 27/3/2008 passed by the Commissioner of Central Excise (Adj), Belapur] For approval and signature: Honble Mr Ramesh Nair, Member(Judicial) Honble Mr. 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 :
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?
=======================================================
Virtual Marketing (India) Pvt Ltd
:
Appellant
VS
Commissioner of Service Tax, Mumbai
:
Respondent
Appearance
Shri. A. Sheeragi, Advocate for the Appellants
Shri. Sanjeev R. Nair, Examiner (A.R.) for the Respondent
CORAM:
Honble Mr Ramesh Nair, Member(Judicial)
Honble Mr. C.J. Mathew, Member(Technical)
Date of hearing: 4/5/2016
Date of decision: /2016
ORDER NO.
Per : Ramesh Nair
The fact of the case is that the appellant is engaged in the activity of Event Management, Sales Promotion, Brand Promotion and advertisement through internet and mobile services but they were not discharging their service tax liability in time. In an investigation it was revealed that appellant provided the advertising services. There is no much dispute raised regarding the taxability of the services. Shri. Neeraj Roy, Chief Executive Officer of the appellant company has admitted that they were not making payment of service tax dues promptly and same was due to serious financial crunch and losses suffered by it. He admitted service tax liability and mentioned that they had no intention to evade service tax, they were showing tax liability in their balance sheet and they have been paying their outstanding in instalment. After admitting the service tax liability of Rs. 54,63,548/- they voluntarily deposited service tax as under:
Sr. No. TR-6 Challan No. and date Amount
1. 04/2002-02 dt. 21.12.04 12,500/-
2. 05/2002-02 dt. 21.12.04 1,56,594/-
3. 06/2002-02 dt. 21.12.04 1,76,916/-
4. 07/2002-02 dt. 21.12.04 2,08,868/-
5. No. Nil dt. 03.01.05 4,68,322/-
6. No. Nil dt. 25.01.05 5,00,000/-
7. No. Nil dt. 09.02.05 5,00,000/-
8. No. Nil dt. 19.03.05 10,00,000/-
9. No. Nil dt. 31.03.05 21,00,000/-
10. No. Nil dt. 13.05.05 3,40,348/-
Total 54,63,548/-
Subsequently, a show cause notice was issued for demanding Service tax dues and also for imposition of penalty. In the Adjudication order the service tax demand of Rs. 59,91,371/- and Rs. 6,11,003/- were confirmed and amount of Rs. 54,63,548/- paid by the appellant was appropriated. Apart from this, interest under Section 75 was demanded and penalties under Section 76,77 and 78 were also imposed. Being aggrieved by the Adjudication order, the appellant is before us.
2. Shri. A. Sheeragi, Ld. Counsel for the appellant not pressed the demand of service tax, however submits that penalties imposed on the appellant are not warranted in terms of Section 80 of the Finance Act, 1994. He submits that in the last hearing this Honble bench after hearing partly directed appellant to pay interest. Accordingly, the appellant deposited the interest on the service tax demand. He submits that as regard the service tax, the appellant has been paying in installment from time to time and the major amount of service tax was already paid before issuance of show cause notice. He submits that the non payment of service tax in time has occurred due to serious financial crisis for the reason that in and around March, 2000 world over, the information technology industry suffered a major set back. The so called dotcom bubble burst world over and the dotcom crash took place subsequently. The ripple of the same were felt in India to a large extent as the major work force in the Information Technology industry hails from India. Due to this crisis which struck the information technology industry world over serverly impacted the appellant business, their cash flow and their profitability, due to this reason service tax could not be paid in time, however this is not case where appellant had malafide intention to evade service tax. Appellant have shown outstanding in their balance sheet which clearly established the fact that appellant at all times intended to pay their liability. Through their Chief Executive Officer in the statement undertaken to discharge the entire service tax liability and accordingly discharged the service tax even before issuance of show cause notice. Ld. Counsel for the appellant prays for waiver of penalties imposed under Section 76, 77 and 78 by invoking Section 80.
3. Shri. Sanjeev R. Nair, Ld. Examiner (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He further submits that appellant claimed that the reimbursement should not be levied Service tax. In the fact of the case that service tax provided by the appellant is of advertising services and all the element claim as reimbursement are the integral part of output services therefore the same can not be excluded from the gross value of services. Hence, the service tax is payable on the gross value and no deduction on account of reimbursement can be allowed. Regarding the penalties he submits that it is admitted fact that the appellant had collected the service tax and not discharged, therefore no immunity can be granted to the appellant from penalties. He placed reliance on the following judgments:
(a) Mickinsey & Company INC. Vs. Commissioner of C. Ex. & Cus., Mumbai[2007(6) S.T.R. 420(Tri. Mumbai)]
(b) Sri Bhagvathy Traders Vs. Commissioner of Central Excise, Cochin[2011(24) S.T.R. 290 (Tri. LB)]
(c) Punjab Advertising Co. Vs. Commr. Of C. Ex. & S.T. Panchkula[2013(31) S..T.R. 233(Tri. Del)]
(d) Bombay Intelligence Security (I) Ltd. Vs. Commr. Of S.T. Mumbai-II[2015(38) STR 588(Tri. Mumbai)]
(e) Indsur Global Ltd Vs. Addl. Commr. Of Service Tax, Vadodara[2015(38) S.T.R. 14(Guj)]
(f) Triton Communication Pvt Ltd Vs. Commissioner of Ex. Mumbai[2007(6) S.T.R. 58(Tri. Mumbai)]
(g) Commissioner of C. Ex. Kolkata-I Vs. Gurdian Leisure Planners Pvt Ltd [2007(6) S.T.R. 32(Tri. Kolkata)]
(h) Inma International Security Academy P. Ltd Vs. C.C.E. Channai[2006(1) S.T.R. 289(Tri. Chennai)]
(i) Kala Sagar Vs. Commissioner of Service Tax, Mumbai-II[2015(38) S.T.R 1017 (Tri. Mumbai)]
4. We have carefully considered the submissions made by both sides and pursed the record.
5. As regard the tax liability of the services, we find that services provided by the appellant are indeed taxable and the same is liable for service tax. As regard the penalties under Section 76, 77 and 78, we find that the appellant though not discharged service tax in due time but they have been paying service tax in installment and almost entire demand was paid before issuance of show cause notice. The appellant given reason for non payment of service tax in time that they were in severe financial crisis. It is also fact that appellant had accounted for entire service tax payable as an outstanding in their books of accounts which shows that they had bonafide intention to discharge the service tax. Even if the service tax was collected but shown as a outstanding in the balance sheet, it can be construed that appellant had no malafide intention. Considering over all facts and circumstances of the case we are of the view that appellant has been able to show reasonable cause for non payment of service tax on due time. Interest on the said service tax also paid by the appellant separately as per the direction of this Tribunal. We are of the view that appellant is entitle for waiver of penalty under Section 76,77 and 78 in terms of Section 80 of the Finance Act, 1994, we therefore set aside the penalties. However the service tax demand confirmed by Adjudicating authority and payment made by the appellant alongwith interest is maintained. Appeal is partly allowed in the above terms.
(Order pronounced in court on_______________) C.J. Mathew Member (Technical) Ramesh Nair Member (Judicial) sk 7 ST/146/08