2015 (11) TMI 336 - AT - Service Tax

Contesting the service tax liability after admitted the same before adjudicating authority - levy of penalty - Benefit of exemption and abatement as per Notification 9/2004-ST and 1/2006-ST - Duty demand u/s 11D - Held that - miscellaneous application is devoid of merits and needs to be dismissed for more than one reason. Firstly, we find that the appeal has been filed by the appellant in November, 2010 and the miscellaneous application is filed in April 2015, almost after a gap of five years. The assessee is not able to explain such a delay in filing or taking up additional grounds of appeal before the Tribunal. Appellant had conceded the issue on merits before the adjudicating authority, inasmuch as the adjudicating authority has recorded clearly that the appellant is not disputing the service tax liability demanded along with interest, but the request was to consider and take a lenient view while imposing penalties. Due to these reasons, we hold that the appellant cannot today agitate the issue on merits. Assessee are not contesting the factual findings as to that they had collected the service tax liability from their clients and did not deposit the same to the government treasury. On this factual matrix, we find that the prayer made by the learned counsel as to invoking the provisions of Section 80 to set aside the penalties are unacceptable and not in consonance with the law. In the absence of any justifiable reason, the appellant could not have kept with them an amount collected as service tax. - impugned order is correct and does not suffer from any infirmity - Decided against assessee.

Summary

Issues:
1. Additional grounds raised by the appellant under Rule 10 of CESTAT (Procedure) Rules, 1982.
2. Delay in filing the miscellaneous application for additional grounds.
3. Appellant conceding the issue on merits before the adjudicating authority.
4. Imposition of penalties under various sections of the Finance Act, 1994.
5. Collection of service tax liability by the appellant but not depositing it into the government account.

Analysis:

1. The appellant filed a miscellaneous application to raise additional grounds under Rule 10 of the CESTAT (Procedure) Rules, 1982. The appellant argued that the demands confirmed were exaggerated and based on wrong calculations. They claimed the benefit of exemption and abatement under specific notifications, and questioned the recovery of amounts under Section 11(D) of the Central Excise Act, 1944. However, the Tribunal found the application devoid of merits due to a significant delay of almost five years in filing the application after the appeal was initiated. The appellant's concession on the issue before the adjudicating authority further weakened their case for raising additional grounds, leading to the rejection of the application.

2. The Tribunal noted that the appellant had conceded the issue on merits before the adjudicating authority, where the focus was on requesting leniency in imposing penalties rather than disputing the service tax liability demanded. This concession, coupled with the delay in filing the miscellaneous application, led the Tribunal to reject the appellant's attempt to raise additional grounds at this stage. The Tribunal emphasized that the appellant could not now contest the issue on merits after having previously accepted it before the lower authority.

3. Regarding the imposition of penalties under various sections of the Finance Act, 1994, the appellant argued that since they had paid the entire service tax liability and interest promptly after being notified, the penalties should be set aside. However, the learned AR contended that the penalties were justified as the appellant had collected the service tax but failed to deposit it into the government account. The Tribunal upheld the penalties imposed by the adjudicating authority, emphasizing that the appellant's failure to deposit the collected service tax amounted to a violation.

4. The Tribunal carefully reviewed the findings of the adjudicating authority, which clearly established that the appellant had collected service tax from clients but had not remitted it to the government treasury. The appellant's challenge was solely against the penalties imposed, without contesting the factual evidence of non-depositing the collected tax. Given this scenario, the Tribunal found the appellant's plea to invoke Section 80 to set aside the penalties unjustifiable and contrary to the law. The Tribunal concluded that the penalties were valid and in accordance with the law, ultimately rejecting the appeal for lacking merit.