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TMI Blog2011 (8) TMI 423X X X X Extracts X X X X X X X X Extracts X X X X ..... is amendment is only clarificatory in nature. - CEAC Nos. 6 & 7 of 2009 - - - Dated:- 3-8-2011 - A.K. Sikri and M.L. Mehta, JJ. P.S. Patwalia, Arvind Nayar and Ms. Neha Kushwaha for the Appellant. Mukesh Anand, R.C.S. Bhadoria and Shailesh Tiwari for the Respondent. JUDGMENT A.K. Sikri, J. The appellant in both these appeals, filed under Section 35G(3) of the Central Excise Act,1944 read with Section 83 of the Finance Act,1994, is the same company. The challenge is also to the singular judgment dated 19th June, 2006 passed by Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as the Tribunal) whereby two appeals of the appellant herein have been decided. Primary, nay, sole grievance of the appellant is against the imposition of penalties. These penalties were the result of two orders dated 19th June, 2009 and 31st January, 2006 passed by the Commissioner of Tax, New Delhi on identical grounds, albeit for varying periods, resulting into two proceedings giving rise to two appeals. Otherwise issues are common in both the appeals which are admitted on the following substantial questions of law:- 1. Whether the Tribunal erred while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Sales Executive, Sh. Harminder Singh, Sales Manager, Sh. Kuldeep Singh, Manager (Accounts) and Sh. Mohinder Singh Bajaj Director of the appellant were recorded. Thereafter, show cause dated 17th October, 2005 was issued by the respondent stating that the appellant had rendered air travel agent services to the tune of Rs. 2,58,62,84,429/- but had declared to the department in the ST-3 returns only a taxable value of Rs. 1,30,77,36,056 thereby suppressing a taxable value to the tune of Rs. 1,27,85,48,373/-involving short payment of Service Tax amounting to Rs. 86,02,849/-and Education Cess Rs. 64,029/- for the period April, 2000 to March, 2005 for Branch Office, New Delhi. It was further alleged that the appellant did not depict the exact basic fare figures of tickets sold in their ST-3 returns submitted to the department during the period referred above and that there had been under valuation of the taxable services. On this basis, in the show cause notice, the appellant was asked to show as to why:- (i) the service tax amounting to Rs. 86,02,849/- and Education Cess amounting to Rs. 64,029/- payable for the period April, 2000 to March, 2005 should not be recovered from them u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. However, the Commissioner of Service Tax, Delhi did not agree with the contentions of the appellant. He, therefore, passed the orders dated 31st January, 2006 and confirmed the demand of Service Tax amounting to Rs. 86,02,849/- (which was already paid by the appellant) and also ordered for an Education Cess of Rs. 64,029/- interest as per provisions of Section 75 of the Act. The amount of Rs. 29,00,000/- already paid by the appellant as interest was accepted by the Commissioner of Service Tax. He has also imposed penalty of Rs. 100/- for every day of default under Section 76 and Rs. 86,66,878/- under Section 78 and also imposed penalty of Rs. 1000/- under Section 77 of the Act on the appellant. To the same effect orders were passed for other period. 5. Being aggrieved by the orders passed by the Commissioner of Central Excise, the appellant preferred two appeals before the Tribunal. The Tribunal decided these appeals vide impugned orders dated 19th June, 2006. It was found by the Tribunal that the appellant was actually paying the service tax at the prevailing rate under Section 66 on the net commission instead of on the gross commission. That had resulted in short payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate and even those offences are committed in the course of same transactions or arise out of the same act, penalty would be imposable both under Section 76 as well as Section 78 of the Act. However, the penalty under Section 76 is reduced to Rs. 1005 per day in one of these appeals. 9. In so far as penalty under Section 78 of the Act is concerned, the Tribunal took note of the fact that it is attracted wherever any service tax has not been levied or paid or has been short levied or short paid or erroneously refunded by the reason of fraud, suppression of facts, willful misstatement or contravention of any provisions of Finance Act or of the rules made thereunder with intent to evade the payment of service tax. According to the Tribunal the ingredients of this provision have been satisfied in the instant case as there was deliberate mis-declaration in the ST- 3 returns by the appellant with the intention to suppression of measure of levy. However, going by that fact that service tax as determined under Section 73 (2) of the Act alongwith interest and penalty was paid within 30 days from the date of the communication of the order, having regard to the first and second proviso to S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of bona fide reason and under Section 80 of the Act, the appellant ought not to have been penalized for the same. According to the appellant the Tribunal has miserably failed to appreciate this plea of the appellant based on cogent and material facts available on record as well as various judgments holding that in such circumstances there is a reasonable cause in not depositing the service tax and the penalty should not have been imposed. 11. It is also contented by the appellant that Section 78 has been amended by the Finance Act, 2008 categorically providing that in case where penalty for suppressing the value of tax under Section 78 is imposed, penalty for failure to deposit the service tax under Section 76 of the Act shall not apply and, therefore, simultaneous penalties both under Section 76 and 78 of the Act cannot be imposed. 12. Mr. Mukesh Anand, learned counsel appearing for the Department countered the aforesaid submissions of Mr. Patwalia. His thrust was that it was not a case of bona fide error on the part of the appellant who had in fact collected the service tax from the customers but did not deposit the same. He highlighted the facts that as per the scrutiny, fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was not reflecting the correct amount of basic fare. He argued that Rule 6 (7) of the Service Tax Rules, 1944 provided an option to the Air Travel Agent to pay an amount calculated at the specified rate of the basic fare towards the discharge of his service tax liability instead of paying service tax at the rate specified thereunder and the option once exercised would apply uniformly in respect of all the booking of the air travel by the Air Travel Agent and could not be changed during the financial year under any circumstances. In this scenario plea raised by the appellant that although it was aware of both the methods of payment of service tax but nobody advised it that conditions of two cannot be adopted was clearly baseless. It was, therefore, a deliberate mis-declaration on the part of the appellant to suppress the measure levy which was liable for penalty and the penalty imposed in these circumstances was fully justified. 13. We have given our due considerations to the aforesaid submissions made by the learned counsel for both the parties. The service tax was introduced by the Finance Act, 1994 and the relevant provisions are contained in Chapter-V of the said Act, Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the [Central Excise Officer] determining such service tax, the amount of penalty liable to be paid by such person under this section shall be twenty five per cent of the service tax so determined: Provided further that the benefit of reduced penalty under the first proviso shall be available only if the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso: Provides also that where the service tax determined to be payable is reduced or increased by the Commissioner (appeals), the Appellate Tribunal or, as the case may be, the Court, then for the purposes of this section, the service tax as reduced or increased, as the case may be, shall be taken into account: Provided also that in case where the service tax determined to be payable is increased by the Commissioner (appeals), the Appellate Tribunal or, as the case may be, the court, then, the benefit of reduced penalty under the first proviso shall be available, if the amount of service tax so increased, the interest payable thereon and twenty five per cent of the consequential increase of penalty have also been paid within thirty days of communication of the order by w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and even if the offences are committed in the course of same transactions or arise out of the same act, penalty would be imposable both under Section 76 and 78 of the act. We are in agreement with the aforesaid rule. 16. No doubt, Section 78 of the Act has been amended by the Finance Act, 2008 and the amendment provides that in case where penalty for suppressing the value of taxable service under Section 78 is imposed, the penalty for failure to pay service tax under Section 76 shall not apply. With this amendment the legal position now is that simultaneous penalties under both Section 76 and 78 of the Act would not be levied. However, since this amendment has come into force w.e.f. 10th May, 2008, it cannot have retrospective operation in the absence of any specific stipulation to this effect. Going by the nature of the amendment, it also cannot be said that this amendment is only clarificatory in nature. We may mention that Punjab and Haryana High Court in CCE v. Pannu Property Dealers [2010] 29 STT 180 has taken the view that even if the scope of two sections of the Act may be different, the fact that penalty has been levied under Section 78 could be taken into account for lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y when no tax is paid at all as it deals with "failure to pay service tax" and not when tax is paid but short-paid. However, the defence of the appellant is that this failure was due to reasonable cause and, therefore, Section 80 becomes applicable. A bare reading of this provision would show that the onus is upon the appellant to prove "reasonable cause" for this failure. The moot question is as to whether the appellant has been able to discharge this onus? Before we advert to this issue, it is necessary to understand the meaning which is to be assigned to expression "reasonable cause". It would mean, in common parlance a cause or ground which was not unreasonable. To put it otherwise, in the context of this case the appellant has to show that there was sufficient and proper reasons which occasioned the appellant to make short deposits of service tax than required under the provisions of the Act. If the appellant can show that the manner in which he was making the deposits of the service tax was bona fide i.e. in good faith, it would amount to 'reasonable cause'. Bona fide implies in the absence of fraud or unfair dealing. The equivalent of this phrase is "honestly". The correct p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... STAT) (ii) Eta Engg. Ltd. v. CCE 2004 (174) ELT 19/[2007] 8 STT 61 (New Delhi - CESTAT) (iii) CCE v. R.N. Katyal [2008] 17 STT 232 (New Delhi - CESTAT) (iv) Urban Improvement Trust v. CCE [2007] 8 STT 241 (New Delhi - CESTAT) (v) Shree Venkateswar Hi-tech Machiner v. CCE [2007] 8 STT 220 (Chennai - CESTAT) (vi) CST v. PeeKay Co. [2008] 12 STT 413 (Kol. - CESTAT) (vii) CCE v. Bapu Transport [2008] 14 STT 38 (Mum. - CESTAT) (viii) Niki Associates v. CCE [2008] 16 STT 400 (Mum. - CESTAT) (ix) CCE v. Maharashtra Samaj Bhawan Trust [2007] 9 STT 191 (New Delhi - CESTAT) (x) Lakmichand Dharshi v. CCE [2007] 7 STT 79 (Mum. - CESTAT) (xi) CCE v. Bharat Security Services Workers' Cont. [2007] 7 STT 13 (New Delhi - CESTAT) (xii) CCE v. R.K. Electronic Cable Network [2006] 3 STT 418 (New Delhi - CESTAT) (xiii) CCE C. v. Mukul S. Patil [2008] 16 STT 246 (Bom.). (xiv) A.R. Ashish V. Patil v. CCE [2006] 5 STT 325 (Mum. - CESTAT) Even some of the High Courts have taken similar view in the following judgments:- (i) Union of India v. T.P.L. Industries Ltd. 2007 (214) ELT 506 (Raj.) (ii) CCE v. Sigma Steel Tubes 2007 (82) RLT 361 (P H) (iii) Union of I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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