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TMI Blog2014 (4) TMI 957X X X X Extracts X X X X X X X X Extracts X X X X ..... were filed during investigation for the first time in September 2006. During the period 2003 onwards, though they had collected the service tax while providing the services to the customers, the same was not deposited to the government account on due dates. It was also found that whenever the amount was deposited, the same was far less than their service tax liability. This situation continued till the beginning of 2006 or about the time when the summon proceedings started. They started paying arrears of service tax in piecemeal. At the time of records of the first statement, appellant admitted that there is unpaid service tax for the year 2004-05 amounting to Rs.92,50,777/-. A part of the amount along with interest was deposited also. In respect of a service for which they were collecting the service tax under the head Business Auxiliary Service (though the correct service would be Cargo Handling Service) the tax was paid in December 2004 and the return was filed only in February 2007. Investigation further yielded that even the service tax returns which were filed after initiation of investigation did not reflect the position correctly relating to value of service tax and payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id the service tax. Ld. advocate further argued that the whole issue has arisen as the promoter of the appellant company was a Captain in the Merchant Navy and is not familiar with the tax aspect. All the financial work was assigned to an independent Chartered Accountant and the said Chartered Accountant was handling the work from the beginning. It was in 2005 that they realised that many financial irregularities are committed by the Chartered Accountant without their knowledge, and in view of this position, they removed the said Chartered Accountant. Ld. advocate also stated that whatever delay or irregularity have happened is due to the said Chartered Accountant and not due to the Company or its promoter and even if conditions for imposing any penalty under Section 76, 77 & 78 of the Finance Act, 1994 are fulfilled, the same is not imposable in view of Section 8- of the Finance Act, 1994. Section 80 of the Finance Act, 1994 provides that "no penalty shall be imposable on the assessee for any failure referred to in Section 76, 77 & 78, if the assessee proves that there was reasonable cause for the said failure". Ld. advocate contended that whatever has happened has happened due to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hartered Accountant and whatever is required to be done is to be done by the appellant. It was the appellant's decision to engage a Chartered Accountant and at this stage they cannot take shelter in the name of wrong doing of the Chartered Accountant. Ld. AR also argued that there was no reason for the appellant not to take action against Chartered Accountant by filing the criminal complaint and also pursuing with the Institute of Chartered Accountants of India. This has not been done. This itself indicate that name of Chartered Accountant is being used to get out of the penal provisions. Ld. AR further argued that when the Chartered Accountant was removed in 2005 appellant did not take immediate steps to rectify the situation and pay all the arrears and tax and also scrupulously following the law. It is only after the departmental officers started investigation that they paid the substantial amount and later on filed returns. Further, investigation proved that even the returns did not reflect the correct position and there were additional liability. All these prove that there was suppression of fact and willful intention. There was no reason on the part of the appellant to col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly before initiation of investigations dated 26-6-2006: Rs.65.97 lakhs which includes Rs.12.59 lakhs paid on due date); (B) service tax paid belatedly during the course of investigation: Rs.491.25 lakhs (which includes Rs.8.82 lakhs paid on due date) & (C ) Service Tax paid after issue of SCN dated 24.10.2008: Rs.28,64,919/- (this includes cash payment of Rs.10,66,501/- and Cenvat credit of Rs.17,98,418/-) 6. The above mentioned finding has not been controverted by the appellant before us. We also observe that service tax returns were filed only after the investigation were started. However, even in these service tax returns, the information was not fully correct. The value of taxable service did not reflect the correct amounts and hence the service tax payable was also not correct. Most of the tax has been paid during 2006-07 even though same pertains to the period 2003 onwards. We also note that Adjudicating Authority has noted that the appellant was showing the service tax separately in the invoice and was recovering separately. This implies that the appellant were collecting the tax but not remitting the same to the government. Thus, that was suppression of facts as also contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s-statement or suppression of facts, or contravention of any of the provisions of this Chapter or the rules made thereunder, with intent to evade payment of service tax, by such person or his agent, to whom a notice is served under the proviso to sub-section (1) by the Central Excise Officer, such person or agent may pay service tax in full or in part as may be accepted by him, and the interest payable thereon under section 75 and penalty equal to twenty-five percent of the service tax specified in the notice or the service tax so accepted by such person within thirty days of the receipt of the notice. 2) The Central Excise Officer shall, after considering the representation, if any, made by the person on whom notice is served under sub-section (1), determine the amount of service tax due from, or erroneously refunded to, such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined. Provided that where such person has paid the service tax in full together with interest and penalty under sub-section (1A), the proceedings in respect of such person and other persons to whom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; (a) fraud; or (b) collusion; or (c) wilful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax. (5) The provisions of sub-section (3) shall not apply to any case where the service tax had become payable or ought to have been paid before the 14th day of May, 2003. (6) For the purposes of this section, "relevant date" means, - (i) in the case of taxable service in respect of which service tax has not been levied or paid or has been short-levied or short-paid - (a) where under the rules made under this Chapter, a periodical return, showing particulars of service tax paid during the period to which the said return relates, is to be filed by an assessee, the date on which such return is so filed; &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual payment of the outstanding amount of service tax: Provided that the total amount of the penalty payable in terms of this section shall not exceed fifty per cent. of the service tax payable. 78. Penalty for suppressing, etc., of value of taxable services. 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 (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made thereunder with the 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 be equal to the amount of service tax so not levied or pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Gupta Coal Field & Washeries Ltd. (supra), we find that the appellant was filing the service tax returns regularly and only for the period October 2008 to March 2009 they did not file the service tax returns in time and has not paid service tax in time. However, on their own ascertainment, they filed the return and paid the entire service tax. In the present case, substantial payments and also filing of the return took place after the investigation started by the department that also based on an intelligence. 12. We have also gone through the case of the Hon'ble High Court of Karnataka in the case of Adecco Flexione Workforce Solutions Ltd. 2012 (26) STR 3 (Kar). The facts of the case are detailed in the said judgement and in view of the details given by us earlier, we find the case is distinguishable and the said case was relating to penalty under Section 76 and 78 are imposed. Moreover, as discussed earlier provisions of Section 73 (3) are not applicable in this case in view of Section 73 (4). 13. We have also gone through the case of the Hon'ble High Court of Karnataka in the case of Vee Aar Secure 2011 (22) STR 517 (Kar). In the said case there was bonafi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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