Custom, Excise & Service Tax Tribunal
Manjeet Kaur Bansal vs Commissioner, Central Excise &Amp ... on 21 September, 2021
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. - IV
Service Tax Appeal No. 51225 of 2020 [SM]
[Arising out of Order-in-Appeal No.UDZ-EXCUS-000-COM-021/2020-21 dated
10.09.2020 passed by the Commissioner of Central Excise & Service Tax
(GST), Udaipur (Rajasthan)
Smt. Manjeet Kaur Bansal, Director ...Appellant
M/s.Dynamic Team Security Pvt. Ltd.
78-79, Janakpuri, Opp. N.B. Nagar
Airport Road, Bedwar,
Udaipur Rajasthan.
VERSUS
Commissioner of Service Tax/GST, ...Respondent
142-B, Niran Magri, Sector-11 Udaipur (Rajasthan) APPEARANCE:
Mr. R.Santhanam, Advocate for the Appellant Mr.Ravi Kapoor, Authorized Representative for the Respondent Coram: HON'BLE MRS. RACHNA GUPTA, MEMBER (JUDICIAL) DATE OF HEARING/DECISION:21.09.2021 FINAL ORDER No. 51845/2021 RACHNA GUPTA Present appeal has been filed being aggrieved of the penalty as has been imposed upon the appellant under Section 78 A of the Finance Act, 1944 vide the Order bearing No.021/2020-21 dated 10th September, 2020. The relevant factual matrix is as follows:-2
Service Tax Appeal No. 51225 of 2020 [SM] That M/s. Dynamic Team Security Pvt. Ltd. (DTSPL), the co-
noticee was engaged in providing of the taxable services under the category of security/detective agency services. Based upon an intelligence, DGGI, Jaipur Zonal Unit initiated an inquiry against the aforesaid company and noticed that service tax amounting to Rs.30240014/- has not been paid by the said company for the period from 1st April 2013 to 30th September, 2016 and the Service Tax for an amount of Rs.510829/- was also found to be not deposited for the period from 1st October, 2016 to 31st March, 2017 which was otherwise to be paid by the said company under the reverse charge mechanism. The present appellant is the Director of the company as was appointed vide the Companies Resolution dated 1st December, 2016. Observing her to be the Officer responsible for the above noticed tax evasion by the aforesaid company that a Show Cause Notice bearing No.63 dated 01.04.2019 was served upon the Company as well as the appellant proposing the recovery of the aforementioned amount of Service Tax. The penalty was also proposed to be imposed on the Company as well as on the present appellant. The said proposal has been confirmed vide Order-under-challenge.
Being aggrieved, the appellant is before this Tribunal.
2. I have heard Shri R. Santhanam, learned Counsel for the Appellant and Shri Ravi Kapoor, learned Authorized Representative for the Revenue.
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Service Tax Appeal No. 51225 of 2020 [SM]
3. It is submitted on behalf of the appellant that the Company M/s. Dynamic Team Security Pvt. Ltd. (DTSPL) had already availed the benefit of Sabka Viswas(Legacy Dispute Resolution) Scheme Rules, 2019. The Discharge Certificate /SVLDRS Form No.4 has already been issued to the Company. The present appellant, however, was under bonafide belief that the said Certificate shall suffice for her as well. It is further mentioned that otherwise also despite the appellant was appointed as Director of the Company since December, 2016 but she was not In-charge of day-to-day affairs. It was one Mr. Amar Singh Gautam who initially was General Manager and later was promoted as the Finance Director. He was responsible for day-to- day finance affairs of the Company. Ld. Counsel has made emphasis upon the returns and the financial statements which used to be filed under the signature of the said Amar Singh Gautam only. It is also impressed upon that the present appellant was not in a position to even check the affairs of the Company as her husband was battling a chronic medical issue as that of brain tumor who used to be hospitalized and had undergone repeated surgical interventions. Ultimately he went into coma and passed away finally on 24.06.2017. It is impressed upon that such grave circumstances didn't permit the appellant to at all be aware about the issue as has been highlighted vide the impugned Show Cause Notice. It is also mentioned that all such facts with entire medical history were provided to the Department at the stage of filing reply to the Show Cause Notice itself. Non-consideration of such 4 Service Tax Appeal No. 51225 of 2020 [SM] facts while imposing penalty under Section 78 A is mentioned to have been unjustified.
4. It is submitted that appellant actually had no knowledge for the impugned non-deposition of the tax. Ld. Counsel further mentioned that in fact, the tax liability stands already discharged. Amount of Rs.97 Lakhs approximately was deposited, even before the issuance of Show Cause Notice and major portion thereof stood deposited during the pendency of the adjudication before the Department. The entire liability towards the impugned demand stands discharged by the Company under SVLDR Scheme. Confirmation of penalty in the given circumstances is alleged as absolutely unreasonable unjustified and hence, is prayed to be set aside. Appeal, accordingly, is prayed to be allowed. Ld. D.R. has relied upon the following case laws:-
1. V.S. Bobba vs. Commissioner of Central Tax, Bangalore North reported in 2021 (52) GSTL 67 (Tri.-Bang.)
2. Gurubani Security Pvt. Ltd. vs. PR. Addl. Dir. General (Adj.), DGGSTI, New Delhi reported in 2021 (51) GSTL 404 (Tri. -
Del.)
3. Sikar Ex-Serviceman Welfare Co-OP. Society Ltd. vs. Commr. Of C.Ex. & ST, Jodhpur reported in 2021 (52) GSTL 75 (Tri. - Del.)
5. Per-contra ld. D.R. has submitted that there is no infirmity in the order under challenge; technically once company has filed a declaration under Sabka Viswas (Legacy Dispute Resolution) 5 Service Tax Appeal No. 51225 of 2020 [SM] Scheme Rules, 2019, there is sufficient acknowledgement of the liability towards the impugned demand. The Director of Company also had to apply under the said Scheme only. Application on behalf of Company cannot absolve the Director / the appellant of the liability as has already been confirmed against her. Ld. D.R. has also impressed upon that there is otherwise sufficient admission on the part of the present appellant that the impugned amount of Service Tax was not deposited. Her statement RUD-21 as was recorded on 29th March, 2019 where she has acknowledged that the impugned tax amount has not been deposited. Learned D.R. also brought to the notice that even the statement of Amar Singh Gautam was recorded on 20th September, 2018 (RUD-7) who has admitted that the Company had collected Service Tax amounting to Rs.7,31,00,966/- in the Financial Year 2013-14 to 2016-17. But the requisite Service Tax thereof was not deposited. He also admitted that he looks after the entire financial matters of the company but under the guidance of the Director of the Company who earlier was Mr. Ajaypal Singh Bansal and post his death it was the present appellant. Ld. D.R. has emphasized that these admissions have rightly been considered as sufficient by the adjudicating authority below to impose the penalty upon the present appellant. The order of Hon'ble High Court of Rajasthan, Jaipur Bench by granting rebate to the present appellant in the matter of impugned non-deposition of Service Tax has also been impressed upon by ld. D.R. Appeal is accordingly, prayed to be dismissed. 6
Service Tax Appeal No. 51225 of 2020 [SM]
6. After hearing both the parties, keeping in mind the rival contentions, the record of the present appeal and the relied upon case laws, I observe and hold as follows:-
7. The present appeal is about challenging the penalty as has been imposed upon the appellant under Section 78 A. The penalty under the Section is imposed for the same reasons as it is being imposed under Section 78 but for the similar offence being committed by the Director of the concerned Company. Both these provisions read as follows:-
"SECTION 78. Penalty for failure to pay service tax for reasons of fraud, etc. -- (1) Where any service tax has not been levied or paid, or has been short-levied or short-paid, or erroneously refunded, by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of this Chapter or of the rules made there-under with the intent to evade payment of service tax, the person who has been served notice under the proviso to sub-section (1) of section 73 shall, in addition to the service tax and interest specified in the notice, be also liable to pay a penalty which shall be equal to hundred per cent. of the amount of such service tax :
Provided that in respect of the cases where the details relating to such transactions are recorded in the specified records for the period beginning with the 8th April, 2011 upto the date on which the Finance Bill, 2015 receives the assent of the President (both days inclusive), the penalty shall be fifty per cent. of the service tax so determined :
Provided further that where service tax and interest is paid within a period of thirty days of --
(i) the date of service of notice under the proviso to sub-section (1) of section 73, the penalty payable shall be fifteen per cent. of such service tax and proceedings in respect of such service tax, interest and penalty shall be deemed to be concluded;
(ii) the date of receipt of the order of the Central Excise Officer determining the amount of service tax under sub-section (2) of 7 Service Tax Appeal No. 51225 of 2020 [SM] section 73, the penalty payable shall be twenty-five per cent. of the service tax so determined :
Provided also that the benefit of reduced penalty under the second proviso shall be available only if the amount of such reduced penalty is also paid within such period :
Explanation. -- For the purposes of this sub-section, "specified records" means records including computerized data as are required to be maintained by an assessee in accordance with any law for the time being in force or where there is no such requirement, the invoices recorded by the assessee in the books of accounts shall be considered as the specified records.
(2) Where the Commissioner (Appeals), the Appellate Tribunal or the court, as the case may be, modifies the amount of service tax determined under sub-section (2) of section 73, then, the amount of penalty payable under sub-section (1) and the interest payable thereon under section 75 shall stand modified accordingly, and after taking into account the amount of service tax so modified, the person who is liable to pay such amount of service tax, shall also be liable to pay the amount of penalty and interest so modified.
(3) Where the amount of service tax or penalty is increased by the Commissioner (Appeals), the Appellate Tribunal or the court, as the case may be, over and above the amount as determined under sub-section (2) of section 73, the time within which the interest and the reduced penalty is payable under clause (ii) of the second proviso to sub-section (1) in relation to such increased amount of service tax shall be counted from the date of the order of the Commissioner (Appeals), the Appellate Tribunal or the court, as the case may be. ] SECTION 78A. Penalty for offences by director, etc., of company.-- Where a company has committed any of the following contraventions, namely :--
(a) evasion of service tax; or (b) issuance of invoice, bill or, as the case may be, a challan
without provision of taxable service in violation of the rules made under the provisions of this Chapter; or
(c) availment and utilization of credit of taxes or duty without actual receipt of taxable service or excisable goods either fully or partially in violation of the rules made under the provisions of this Chapter; or 8 Service Tax Appeal No. 51225 of 2020 [SM]
(d) failure to pay any amount collected as service tax to the credit of the Central Government beyond a period of six months from the date on which such payment becomes due, then any director, manager, secretary or other officer of such company, who at the time of such contravention was in charge of, and was responsible to, the company for the conduct of business of such company and was knowingly concerned with such contravention, shall be liable to a penalty which may extend to one Lakh rupees.] Explanation. -- For the removal of doubts, it is hereby clarified that where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, and the proceedings with respect to a notice issued under sub-section (1) of section 73 or the proviso to sub-section (1) of section 73 is concluded in accordance with the provisions of clause (i) of the first proviso to section 76 or clause (i) of the second proviso to section 78, as the case may be, the proceedings pending against any person under this section shall also be deemed to have been concluded.".
8. The perusal thereof makes it abundantly clear that the penalty under these Sections can be imposed, if and only if, there has been an evasion of tax that too with utmost intent to not to pay the said tax. Reverting to the facts of the present case, the period of demand is from April 2013 to June 2017. The appellant was appointed as Director on 1st December, 2016. This apparent fact is sufficient to falsify any involvement as that of intent/knowledge of the appellant being the Director about tax evasion by the appellant for the period from April, 2013 to November, 2016. For the remaining period, no doubt, there is an admission of the appellant that the impugned demand was not paid at the relevant time, but the admission is rather more in the form of acknowledgement that the non-payment was due to unavoidable circumstances as that of grave medical illness of the spouse of the appellant who finally succumbed to that illness on 9 Service Tax Appeal No. 51225 of 2020 [SM] 24th June, 2017. This fact has been brought to the notice of the Department since the time the Show Cause Notice has been issued but the same has not at all been considered by the Adjudicating Authority below.
9. The authority has miserably failed to distinguish the nonpayment of tax for the reasons beyond the control of the assessee from the situation where the assessee has failed to deposit tax with the sole intention to not to deposit the same. Section 78 / 78A can be attracted only in the later situation. I observe that there are ample medial documents on the record of this appeal. Perusal whereof reveals that the spouse of the appellant was diagnosed a brain lesion way back in the year 2005 when he was for the first time operated. The surgical interventions were repeated as it was again in 2008, 2014 and lately in 2017 thereafter he even went into Coma and finally passed away. This situation definitely was one of the gravest situations for the present appellant to actually to not be fully aware about the day-to-day affairs of the Company. There is sufficient admission of Amar Sigh Gautam that he was looking after the financial affairs of the Company. The financial statements in the form of balance-sheets, tax returns etc. as placed on record bear his signature as the person authorized for the Company. None of those documents bear the signature of the appellant. Department has not produced any such documents for a subsequent period where the appellant would have been a 10 Service Tax Appeal No. 51225 of 2020 [SM] signatory to such returns. Mere oral submission of Mr. Amar Singh Gautam that he was acting under the guidance of the appellant cannot be fully sufficient for holding at least that the appellant had the knowledge and the intent to not to make the impugned payment.
10. From the order of Hon'ble High Court of Rajasthan while granting her Bail also it is apparent that out of the total demand Rs.1.12 Crore was deposited at the initial stage of proceedings itself. As already submitted by learned Counsel for the appellant Rs.97 Lakhs were deposited even before the issuance of Show Cause Notice. These apparent admitted facts are sufficient to falsify any malafide intent with the appellant to avoid or to not to discharge here tax liability. This observation is sufficient for me to hold that at least Section 78A cannot be invoked against the appellant. The penalty confirmed there-under is accordingly, held to be not sustainable. I draw my support from the decision of Apex Court in the case of Hindustan Steel Ltd. vs. State of Orissa reported in 1978 (2) E.L.T. 159 (S.C.) wherein it was held that penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Further, we find that in the SCN, it has not been established that these individuals have acted in contumacious manner so as to impose penalty. In another case titled as Continental Foundation Joint Venture vs. CCE, Chandigarh - Hon'ble Apex Court held that omission by a party to do what he might have done would not render it 11 Service Tax Appeal No. 51225 of 2020 [SM] suppression. As far as fraud and collusion are concerned, it is evident that the intent to evade duty is build into these words. So far as the misstatement or suppression is concerned, they are clearly qualified by the word 'wilful' preceding the words "mis-statement or suppression of facts" which again means intent to evade duty. Apparently, there is no deliberate intent on part of appellant to not to pay the duty.
11. Hon'ble High Court of Delhi also in the case of Anil Kumar Mahisaria vs. Commissioner of Customs reported in 2008 (228) ELT 166, it was held that in case of any noticed evasion /non-deposition of tax by a Company only one set of penalty can be imposed either on the Company (the Proprietorship fir therein) or on the person In-charge of day-to-day affairs. The Company herein admittedly has been issued a Discharge Certificate under SVLDR Scheme.
12. In totality of the circumstances, it is opined that Commissioner has erred while imposing penalty upon the appellant while ignoring the unavoidable circumstances as were explained to be reasons for not depositing duty in time. Hence, the order under challenge is hereby ordered to be set aside. Appeal resultantly stands allowed.
[Dictated and pronounced in the open Court] (RACHNA GUPTA) MEMBER (JUDICIAL) 12 Service Tax Appeal No. 51225 of 2020 [SM] Anita