9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (10) TMI 59 - AT - Service TaxLevy of penalty - Service tax with interest paid before issuance of SCN - CENVAT Credit used to pay duty which was found ineligible - failure to discharge the duty for the period from February 2009 to December 2009 - Penalty under section 76, 77 and 78 of FA - HELD THAT - The SCN has framed allegations against the appellant for not having discharged duty for the period from February 2009 to December 2009. The demand had not crystallized at that stage and the question of the adjudicating authority scrutinizing the CENVAT credit entries would have been premature. As seen from para 3.0 of the impugned order it was in their reply to the SCN vide their letter dated 04/07/2012 that the appellant had claimed and brought to the notice of the learned adjudicating authority that they had discharged the entire demand even before issue of the SCN. It is only when the issue was finally examined by the adjudicating authority after following the process of natural justice that he recorded his findings, and the demand was confirmed. Scrutiny of the payments made against the demand alleged in the SCN is part of the quasi-judicial process prior to the issue of the order. The non receipt of service has not been disputed before us. Further it is also seen that the impugned order has pointed out discrepancies in the amounts claimed to have been debited towards duty from the credit account and that which was actually debited - This has also not been disputed by the appellant. This only goes to show that the scrutiny of payments claimed by the appellant is a part of the quasi-judicial process involved in the passing of the order in original and any discrepancies noticed and pointed out cannot be faulted. Levy of penalty - issuance of SCN - tax paid along with interest before the issuance of show-cause notice - Section 73(3) of the Finance Act 1994 - HELD THAT - From a plain reading of the section 73 it is seen that nothing contained in sub-section (3) shall apply to a case where section 73 (4) applies. This is a case where the Original Authority has invoked the extended time limit under proviso to section 73(1) of the Finance Act 1994 for demand of service tax citing suppression of facts with an intention to evade payment of duty. The appellant has agreed that duty is payable for the entire period which was subsequently covered by the SCN and has paid a substantial part of the dues. Hence the payment of duty for the extended period, which is triggered by fraud, suppression etc, is not under challenge. This being so section 73 (4) applies in their case and they cannot seek protection under section 73 (3) - the appellants case is covered by section 73 (4) due to which section 73 (3) will not apply. Penalty under section 76, 77 and 78 of FA - HELD THAT - The Appellant has stated that they had not discharged service tax for the period February 2009 to December 2009 due to financial constraints. The Appellant had borrowed heavily from the banks and all receipts were going directly to the bank as per the escrow arrangement. After adjustment of the loan liability the banks directly dispersed the salaries to the employees listed with the bank. Therefore, the appellant was not in a position to pay service tax within the time limit prescribed under the statute. However, the moment the investigating authority discovered the non-payment of service tax, the appellant had discharged duty along with part interest - It was for the appellant to prove financial constraint before the original authority and thereby plead reasonable cause for delayed payment. A bald statement of financial constraint will not be enough. Even as per section 106 of the Indian Evidence Act, the fact within the knowledge of a person must be proved as the burden of proof is cast upon him - the appellant has not shown reasonable cause within the meaning of Section 80 ibid for their failure to pay duty. The subjective satisfaction of the adjudicating authority cannot be interfered with as the impugned order is not shown to be demonstratively perverse based on no evidence or misreading of evidence or which a reasonable person could not form. The penalty imposed is mandatory in nature and as held by the Hon'ble Supreme Court in UNION OF INDIA AND OTHERS VERSUS DHARMENDRA TEXTILE PROCESSORS AND OTHERS 2008 (9) TMI 52 - SUPREME COURT , the section prescribing mandatory penalty should be read as penalty for a statutory offence and the authority imposing penalty has no discretion in the matter in such cases and was duty bound to impose penalty equal to the duties so determined. The impugned order merits to be upheld and is so ordered - Appeal dismissed.
Issues Involved:
1. Eligibility of CENVAT credit used to set off liability. 2. Issuance of Show Cause Notice under Section 73(3) of the Finance Act, 1994. 3. Imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994. 4. Reasonable cause for non-payment of service tax under Section 80 of the Finance Act, 1994. Summary: 1. Eligibility of CENVAT Credit: The appellant argued that the adjudicating authority should not have denied the CENVAT credit of Rs. 4,05,781/- as the Department did not question its eligibility in the Show Cause Notice (SCN). The Tribunal found that the scrutiny of CENVAT credit entries is part of the quasi-judicial process, and the adjudicating authority has the discretion to examine the eligibility of credits during adjudication. Since the appellant was found ineligible for the credit due to non-receipt of service, the Tribunal upheld the denial of the CENVAT credit. 2. Issuance of Show Cause Notice under Section 73(3): The appellant contended that since they paid the service tax along with interest before the issuance of the SCN, no SCN should have been issued as per Section 73(3). The Tribunal noted that Section 73(3) does not apply where Section 73(4) is invoked, which deals with cases involving fraud, suppression of facts, etc. Since the extended time limit under Section 73(1) was invoked due to suppression of facts, the Tribunal held that the issuance of SCN was justified and the appeal on this ground failed. 3. Imposition of Penalties: The appellant cited various judgments to argue that no penalties are warranted when the service tax is paid along with interest before the issuance of SCN. However, the Tribunal distinguished these cases, noting that they did not involve the provisions of Section 73(4). Since the appellant's case involved suppression of facts, the Tribunal upheld the imposition of penalties. 4. Reasonable Cause for Non-Payment under Section 80: The appellant claimed financial constraints as a reasonable cause for non-payment of service tax. The Tribunal found that the appellant failed to provide sufficient evidence to prove financial constraints. The Tribunal noted that the appellant collected tax from customers but did not deposit it with the government, filed returns late, and had unused CENVAT credit. The Tribunal concluded that the appellant did not show "reasonable cause" within the meaning of Section 80 and upheld the penalties imposed. Conclusion: The Tribunal upheld the impugned order, confirming the denial of CENVAT credit, the issuance of SCN, and the imposition of penalties. The appeal was dismissed.
|
