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2013 (12) TMI 40 - AT - Service TaxInterest u/s 75 - Penalty u/s 76, 77 and 78 - Service tax liability - Security services - DGCEI, Vadodara initiated investigation against assessee - After the commencement of the investigation, the appellant firm paid a sum towards the Service Tax liability - Interest on delayed payment of Service Tax - Assessee contends that there as arithmetic mistake in order - Adjudicating authority directed the appellant to furnish detailed calculation sheets for the verification of alleged arithmetical mistakes in the computation of Service Tax demand - Held that - Neither in the appeal memorandum nor in other documents submitted by the appellant along with the appeal memorandum, any calculation-sheet has been furnished - The impugned order was passed on 16.3.2007 and more than six years have lapsed since then and inspite of such a long period, the appellant has not shown or produced any evidence in support of their claim that there are errors in computation of Service Tax demand. Therefore, the contention of the appellant remains a mere allegation without any supporting evidence. Section 73 provides for assessment of tax and thereafter, payment of tax. Demand under Section 73A does not require any assessment of tax at all. It deals with payment of tax to the exchequer if any amount has been collected in excess of the Service Tax assessed or determined. Even in a case where service is not available. If any amount has been collected, which is not required to be so collected, the Section provides for crediting of the amounts so collected to the exchequer. Thus, Section 73 and 73A deal with altogether different situations. Penalty under Section 76 is imposed for default in payment of tax and, no mens rea is required to be proved for imposing such penalty. For mere default and delay in payment of tax, the liability to penalty arises. As regards the penalty under Section 78, the same is attracted when Service Tax is demanded and confirmed invoking the extended period of time and short-levy or short-payment or non-levy or non-payment or erroneous refund is on account of fraud or collusion or willful mis-statement and suppression of facts and contravention of any of the provisions to chapter V of the Finance Act, 1994 or to the rules made thereunder, with an intent to evade payment of Service Tax. In the present case, the appellant had suppressed the value of the taxable service received by them in their ST-3 Returns and in respect of the year 2004-05 and 2005-06, the appellant did not file any return at all. It has also been admitted in the statements recorded under Section 14 of the Central Excise Act by the Managing Director of the appellant firm that they mis-declared the value so as to evade payment of Service Tax - Decided against assessee.
Issues Involved:
1. Re-quantification of Service Tax demand. 2. Applicability of Section 73 vs. Section 73A of the Finance Act, 1994. 3. Imposition of simultaneous penalties under Sections 76 and 78 of the Finance Act, 1994. 4. Legality of imposing penalties on the Managing Director under Section 78. 5. Option to pay 25% of the penalty within a stipulated time. Issue-wise Detailed Analysis: 1. Re-quantification of Service Tax demand: The appellant contended that the impugned order erred in directing the Superintendent to re-quantify the Service Tax amount after confirming the demand. The Tribunal rejected this contention, noting that the appellant failed to provide any detailed calculation sheet for verification. Despite more than six years since the impugned order, the appellant did not produce any evidence supporting their claim of errors in the computation of the Service Tax demand. Thus, the contention was deemed a mere allegation without supporting evidence and was rejected. 2. Applicability of Section 73 vs. Section 73A of the Finance Act, 1994: The appellant argued that the demands should have been confirmed under Section 73A instead of Section 73. The Tribunal clarified that Section 73 deals with short-levy or short-payment, non-levy or non-payment, or erroneous refund of Service Tax, requiring assessment of the tax. In contrast, Section 73A pertains to the payment of tax collected to the credit of the Central Government without requiring an assessment. The Tribunal found that the issue involved was short-levy and short-payment of Service Tax due to mis-declaration of the value of services rendered, making Section 73 applicable. Therefore, the confirmation of demand under Section 73 was upheld. 3. Imposition of simultaneous penalties under Sections 76 and 78 of the Finance Act, 1994: The Tribunal upheld the imposition of penalties under Sections 76 and 78 for the period prior to 10.5.2008, citing that penalty under Section 76 is for default in payment of tax and does not require proving mens rea. For the period after 10.5.2008, only the penalty under Section 78 was sustained, as the amended provisions stipulated that if penalty under Section 78 is payable, Section 76 shall not apply. 4. Legality of imposing penalties on the Managing Director under Section 78: The appellant contended that imposing a penalty on the Managing Director under Section 78 was impermissible. The Tribunal agreed, stating that Section 78 provides for a penalty on the 'person liable to pay tax,' which is the appellant firm and not the Managing Director. Consequently, the penalty imposed on the Managing Director was set aside. 5. Option to pay 25% of the penalty within a stipulated time: The appellant argued that the adjudicating authority failed to provide the option to pay 25% of the penalty within 30 days. The Tribunal referred to the decision of the Hon'ble Bombay High Court in Commissioner of Central Excise, Raigad Vs. Castrol India Ltd., which held that it is the assessee's responsibility to avail the incentive by paying the duty, interest, and 25% of the penalty within the stipulated time. The Tribunal concluded that the appellant is not eligible for the benefit of reduction in penalty as the adjudicating authority is not obligated to determine or communicate the availability of this option. Conclusion: 1. The demand of Service Tax under Section 73 of the Finance Act, 1994, along with interest under Section 75, was upheld. 2. Penalties on the appellant firm under Sections 76, 77, and 78 for the period prior to 10.5.2008 were upheld; for the period after 10.5.2008, only the penalty under Section 78 was sustained. 3. The penalty imposed on the Managing Director under Section 78 was set aside. 4. The appellant is not eligible for the benefit of paying 25% of the penalty within the stipulated time as per the decision of the Hon'ble Bombay High Court. The appeal was disposed of in these terms.
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