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TMI Blog2010 (7) TMI 774X X X X Extracts X X X X X X X X Extracts X X X X ..... ve per cent of the service tax so determined, assessee claims to have paid service tax much prior to the determination of its tax liability under sub-section (2) of Section 73 - Matter remanded to Adjudicating Authority and directed to consider the question whether or not the petitioner-assessee has discharged its tax liability in terms of the first proviso to Section 78 of the Act. On proper and correct quantification of tax liability under the Act with relevant dates of payments, if the Adjudicating Authority comes to the conclusion that the petitioner-assessee is entitled to the benefit of the first proviso to Section 78, the Adjudicating Authority shall grant the benefit to the petitioner-assessee while quantifying its tax liability, appeal is dismissed - 4975 of 2010 - - - Dated:- 6-7-2010 - V.C. Daga and S.J. Kathawalla, JJ. REPRESENTED BY : S/Shri V. Sridharan with Prakash Shah, i/b PDS Legal, for the Petitioner. S/Shri Pradeep S. Jetly, i/b J.B. Mishra, for the Respondent. [Order]. P.C. : Heard Mr. Sridharan, learned counsel for the petitioner/appellant and Mr. Jetly, learned counsel for the respondents-Revenue. Perused writ petition as well as appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impose penalty on the petitioner-assessee under Sections 76 and 78 of the Act. 7. The petitioner-assessee filed detailed replies to the aforesaid show cause notices and appeared for personal hearing before the respondent-Commissioner of Service Tax. It is relevant to mention that the petitioner-assessee had paid service tax amounting to Rs. 8,44,73,819/- voluntarily even before the issuance of show cause notice. The respondent confirmed the demand of service tax amounting to Rs. 7,67,05,441/- for the period from April, 2001 to March, 2006 vide its order dated 3rd September, 2007. The respondent imposed a penalty of Rs. 100/- per day during which failure to pay service tax continued under Section 76 of the Finance Act, 1994. Furthermore, the Respondent imposed penalty of Rs. 10,00,00,000/- under Section 78 of the Act. 8. Aggrieved by the reduction in demand, of service tax, the Revenue filed Appeal No. ST/08/2008 before the Tribunal. The petitioner-assessee filed a cross appeal/cross objection No. ST/CO-39/2008 contesting the imposition of penalty on the petitioner-assessee under Section 76 and 78 of the Act. The said appeal and cross appeal were heard on 30th September, 2009 by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed by the Tribunal. 14. Being aggrieved by the aforesaid orders, the appellant-assessee has filed appeal being Central Excise Appeal No. 48/2010 to challenge the order dated 17th April, 2009 as also Writ Petition No. 4975/2010 to challenge the order dated 16th November, 2009 refusing to rectify the final order dated 17th April, 2009. Rival Submissions In appeal : 15. Mr. Sridharan, learned counsel for the petitioner-assessee submits that the impugned order dated 17th April 2009 is ex facie erroneous and has been passed in gross violation of principles of natural justice. The Tribunal has overlooked binding precedents of this Court while passing the impugned order. Hence, the impugned order is liable to be set aside on this ground alone. So far as penalty is concerned, he submits that no penalty at all can be imposed on the appellant-assessee under Section 78 of the Act since they had paid the entire amount of service tax not only prior to determination of the liability by the Respondent but even before the issuance of the show cause notice. It is submitted that once there is no service tax due from the appellant-assessee under Section 73(2), no penalty can be imposed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee as well as the Revenue officers. Section 80 is a benevolent provision introduced under the Act. There is no such pari materia provision under the Central Excise Act, 1944 or the Customs Act, 1962 or the Income Tax Act, 1962 or the Central Sales Tax Act, 1956 or under any of the Local VAT laws. Section 80 overrides the provisions of Sections 76, 77 and 78. Section 80 provides for scope of non-imposition of penalty even in case where Sections 78 is attracted. Thus, even in case where a person suppresses the facts with an intent to evade payment of service tax, no penalty can be imposed on such a person under Section 80 if a reasonable cause for such failure is shown. In his submission, this fact of the matter has been overlooked by the Tribunal. Hence, the impugned order is liable to be set aside. 19. Mr. Sridharan further submits that Section 80 provides for non-imposition of any penalty if reasonable cause is shown. Hence, inherent in Section 80 is the power to reduce the penalty, if any, imposed under Sections 76, 77 and 78 of the Finance Act, 1994. In support of his submissions he relied upon C.C.E. v. Punjab National Bank, 2009 (14) S.T.R. 302 (All); C.C.E. v. Ashish V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent case. 23. Without prejudice to the above, Mr. Sridharan submits that once penalty under Section 76 has been imposed on the appellant-assessee, no penalty under Section 78 can be imposed. In other words, penalty under Section 76 and 78 cannot be imposed simultaneously. This is clear from a plain and cumulative reading of both the sections. He, thus, prayed that the impugned orders be quashed and set aside. In Writ Petition : 24. Mr. Sridharan further submits that the respondent No. 2 was in error in rejecting the application of the petitioner-assessee on the ground that factual verification of payment of duty and interest and 25% of penalty is required before extending benefit of proviso to Section 78. According to him, this could hardly be a ground to deny benefit of a statutory provision. If the petitioner s contention required verification of facts, it could have been easily done by seeking confirmation from the Revenue or by calling for the reports from the respondents. The factual verification of payment was capable of being done and non-consideration of benefit flowing from the statutory provision is an error apparent on the face of the record. 25. Without prejudic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the Tribunal. Even the essential facts necessary for claiming such benefit were never pleaded by the petitioner-assessee nor even in the cross-objection filed before the Tribunal. It being a question of fact ought to have been pleaded and proved by the petitioner-assessee. He further submits that this Court not being a Court of appeal is not expected to consider the issue de novo unless the view taken by the Tribunal is found to be perverse. In his submission, if the view taken by the authorities below is found to be reasonable and possible, it need not be interfered with. He, thus, submits that the order dated 16th November, 2009 rejecting rectification application is legal and proper. Consideration : 29. Having heard rival parties and having perused the record and the impugned orders in the appeal as well as writ petition, the submission made by Mr. Jetly deserves acceptance. The Adjudicating Authority in the order in original has graphically sketched the picture how the liability to pay service tax was sought to be evaded by the appellant-assessee. The Tribunal has considered each and every challenge set up in the appeal and dealt with the contentions raised by the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... underwent a change w.e.f. 18-4-2006 and their case relates to period prior to April 2006. The plea of the Noticee is partially accepted. It has already been held that they are liable to penalty but the penalty shall be imposed as per law existing at the time of the omissions and commissions on the part of the Noticees. (Emphasis supplied) 31. So far as the contention raised by the appellant-assessee revolving around Section 80 of the act is concerned, the same is devoid of any substance. Section 80 of the Act is reproduced hereinbelow for immediate reference : 80. Penalty not to be imposed in certain cases. Notwithstanding anything contained in the provisions of Section 76,, Section 77 or Section 78, no penalty shall be imposable on the assessee for any failure referred to in the said provision if the assessee proves that there was reasonable cause for the said failure. 32. The contention revolving around above Section 80 was also raised by the appellant-assessee before the Adjudicating Authority as well as before Tribunal. The findings of the Adjudicating Authority read as under : 4.14 The Noticees have relied on the decision on honourable Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as bona fide. 34. Having said so, next question relating to benefit of proviso to Section 78 needs consideration. The relevant part of Section 78 of the Act reads as under : 78. Penalty for suppressing value of taxable service. Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by reason of-- (a) fraud, or (b) collusion; or (c) wilful mis-statement; or (ci) suppression of facts; or (d) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax, the person, liable to pay such service tax or erroneous refund, as determined under sub-section (2) of section 73, shall also be liable to pay a penalty, in addition to such service tax and interest thereon, if any, payable by him, which shall not be less than, but which shall not exceed twice, the amount of service tax so not levied or paid or short-levied or short-paid or erroneously refunded. Provided that where such service tax as determined under sub-section (2) of section 73, and the interest, payable thereon under section 75, is paid within thirty days from the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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