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TMI Blog2015 (2) TMI 974X X X X Extracts X X X X X X X X Extracts X X X X ..... would be definitely eligible for cum tax benefits. However, this benefit will not accrue where the appellant has collected service tax from the customers separately. Once the demand for service tax is confirmed, interest liability is automatic and consequential. Accordingly, we confirm the liability to pay interest on the delayed payment of service tax by the appellant under the provisions of section 75 of the Finance Act, 1994. Cenvat Credit - Held that:- There is a denial of Cenvat credit to the extent of ₹ 2,33,09,951/- which was taken by the appellant but not utilized. The credit has been denied on account of non-production of duty paying documents for the credit availed during 16/05/2008 to 31/03/2009. Rule 9(9) of Cenvat Credit Rules also envisages that the provider of output services availing Cenvat credit shall submit half yearly returns in the form specified and the appellant has failed to comply with the requirements. Therefore, the availment of credit without the duty paying documents and without filing the prescribed return is not in accordance with the law and accordingly, the appellants are not eligible for the credit. Therefore, denial of credit is justif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of service tax and for non-compliance of statutory provisions relating to the service tax is upheld. However, we set aside the penalties imposed under Section 78 of the Finance Act, 1994. The penalty of ₹ 2,000/- imposed under Rule 15(3) of the Cenvat Credit Rules, 2004 is also upheld. - Decided partly in favour of assessee. - Appeal No. ST/341/12 - Final Order Nos. A/231/2015-WZB/STB - Dated:- 22-1-2015 - P. R. Chandrasekharan, Anil Choudhary And P. K. Jain,JJ. For the Appellant : Shri V Sridharan, Sr. Adv., Shri Sanjay Sachdeva Shri Tarun Govil, Advs For the Respondent : Shri V K Agarwal, Additional Commissioner, AR Shri B K Iyer, Superintendent (AR), Shri Shobha Ra ORDER Per: P R Chandrasekharan: The appeal is directed against Order-in-Original No. 29/ST/SB/2011-12 dated 27/02/2012 passed by the Commissioner (TAR), Mumbai. 2. Acting on intelligence that the appellant, M/s. Global Vectra Helicorp Pvt.Ltd., Mumbai, are engaged in providing taxable services under the category of Supply of Tangible Goods for Use and were not discharging service tax liability thereon, investigations were initiated by the anti-evasion wing of the Service Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 10-7-2009 equal to the service tax short paid apart from a separate penalty of ₹ 2,33,09,951/- under the said section for the wrong availment of cenvat credit. A penalty of ₹ 5000/- was also imposed under section 77 in respect of the said show cause notice. IN respect of show cause notices dated 5-10-2010 and 11-10-2011, penalties were imposed on the appellant under the provisions of Section 76 of the Finance Act for the default in payment of service tax and under Section 77 for non-filing of service tax returns as required under Section 70 read with Rule 7 of the Service Tax Rules, 1994. Aggrieved of the said decision, the appellant is before us. 4. The Ld. Counsel for the appellant made the following submissions. 4.1 The issue involved is the classification of services provided by the Appellant to its clients. The Appellant owns several helicopters, has a Non Scheduled Operators Permit No. 8/1998 (NSOP) issued by the Directorate General of Civil Aviation (DGCA) and is engaged in providing services of transportation of the personnel of the clients to and from their off-shore installations. The Appellant has classified the services provided under the catego ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;C' Part I dated 29.01.2010, even for leasing of an aircraft, the DGCA clearance is required as discussed below: Leasing aircraft from one Indian operator to another Indian operator. In case an Indian operator intends to take an aircraft on lease from another Indian operators, (for domestic or international operations), it shall provide the following information at least 45 days prior to the purposed date of operation with leased aircraft, namely:- (i) Name and address of operator from whom the aircraft is intended to be leased; (ii) AOC details alongwith operations specifications of the lessee and the lessor; Grant of Permission: 7.6 The leased aircraft shall be entered in or deleted from the Air Operator's Permit of the Indian operator. In view of the aforesaid stipulations, it is implicit that the lessor and the lessee both should have a valid Air Operator Certificate (AOC). 4.5 The Aviation Industry is subject to stringent regulatory controls not only in India but across the world. Much of this regulatory environment is to do with the respect of safety and security of passengers in particular and air transport in general. Rule 134(2) of the Ai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of sub-section 65 (105) of the Finance Act, 1994. 4.8 The Civil Aviation Requirements ( CAR ) dated 01.06.2010 relating to minimum requirements for grant of permit to operate non-scheduled Air Transport Services defines Charter operation as under: '3.4 Charter operation is an operation for hire and reward in which the departure firm, departure location and arrival locations are specially negotiated with the customer or the customer's representative for entire aircraft. No ticket is sold to individual passenger for such operation. CAR also provides that,- '2.4 The carriage of passengers by a non-scheduled operator's permit holder may be performed on per seat basis or by way of chartering the whole aircraft on per flight basis, or both. There is no bar on the same aircraft being used for either purpose as per the requirements of customers from time to time. The operator is also free to operate a series of flights on any sector within India by selling individual seats but will not be permitted to publish time table for such flights. Operation of revenue charters to points outside India may also be undertaken as per paragraph 9.2 . 2.5 A non-Sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is a variable component related to actual flying hours only proves that the flying and operation of the helicopters is done by the Appellant. The contractual terms, read holistically, clearly establish that the obligation of the Appellant does not end by simply ensuring availability of a helicopter. The Appellant is obliged to transport personnel of the client as and when required, and has to fulfill all the obligation and responsibilities as an NSOP air transport service provider. In this regard, reliance is placed on the stay order passed by the Tribunal in the case of Mesco Airlines Ltd. v. CST, New Delhi. [2013 (3) TMI 522 - CESTAT, New Delhi]. 4.11 Reliance is also placed on Article 3 and Article 18.5 (General Contract Conditions) of the contract between the Appellant and ONGC and Article 1, Article 4.2, 4.6, 4.9 and 4.12 of the Special Conditions of the said Contract which show that there is no supply of tangible goods service. It is evident from the aforesaid Articles of the contract that at no point of time the intention of the contract between the parties was to supply aircraft to ONGC; rather the intention was to provide air transport services to ONGC where under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the scope of this taxable service, which was duly supported by the legal advice provided to them. In these circumstances, it cannot be said that the Appellant ever had any intention to evade tax. Hence, no case is made for fraud or collusion or willful mis-statement or suppression of facts or violation of the Chapter or rules made thereunder by the Appellant. Accordingly, penalty cannot be imposed under Section 78 in the present case. 4.13 Section 76 of the Finance Act, 1994 provides for imposition of penalty on a person who fails to pay Service Tax if he is liable for such payment under Section 68 of the Finance Act, 1994. Section 68 provides that every person providing taxable service shall pay Service Tax at the specified rate. In other words unless a person is liable to pay Service Tax under Section 68 of the Act, penalty under Section 76 cannot be imposed on such person. It has been substantially explained in the Appeal Memo and the preceding paras that the Appellant was not liable to pay Service Tax under supply of tangible goods service in as much as the services rendered by the Appellant were not covered under the definition of this taxable service as provided in Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner has considered only ₹ 6,73,30,528/- against the abovementioned payment made by the Appellant. The OIO has not provided any reason for not accepting the total amount of ₹ 17,04,84,332/- paid by the Appellant for the period April 2009 to March 2010. Thus, the balance amount paid i.e. ₹ 10,31,53,803/- has not been reflected in the OIO. Hence, the amount of ₹ 10,31,53,803/- should be taken into account while computing the total sum deposited by the Appellant. 5. The Ld. Commissioner (AR) appearing for the Revenue strongly opposed the contentions of the appellant and submitted as follows: (1) The appellant had entered into agreements with ONGC and Transocean Offshore Deepwater Drilling Inc. to supply helicopter on long term basis for use by them in transporting their staff and cargo without parting with the right of possession and effective control of such helicopters. Supply of tangible goods including machinery, equipment and appliances for use, without transferring the right of possession and effective control of such machinery, equipment and appliance became liable to service tax with effect from 16.5.2008. However, the appellant did not pay an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce recipients clearly indicate that the appellant had placed their helicopters at the disposal of the service recipients on time charter basis without parting with the right of possession and effective control. The relevant part of the agreement/contract between the appellant and the ONGC is reproduced below: XXXX Whereas CORPORATION is desirous of charter hire of helicopters for offshore operations for carrying out CORPORATION's operations conforming to specifications as set forth in the Scope of Work of this agreement. XXX 1.11 EQUIPMENT/MATERIALS/GOODS Shall mean and include any equipment, machinery, instruments, stores, goods which CONTRACTOR is required to provide to the ONGC for under the CONTRACT and amendments thereto XXX 1.14 MOBILISATION Shall mean rendering the equipment fully manned and equipped as per CONTRACT and ready to begin work at site designated by ONGC after ONHIRE survey and ONGC's acceptance thereafter. The date and time of ONGC's acceptance of ONHIRE survey will be treated as the date and time of mobilisation. XXX 3.0 DURATION OF THE CONTRACT This CONTRACT shall remain valid for a period of three years from the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Charterer's services on or before 22.5.2006 i.e. within five months (150 days) from the date of Telefax order/NOA, after due approval/clearance from all regulatory authorities including DGCA India and other concerned authority as per law in vogue at the time of delivery for helicopter operation in India for ONGC's offshore t.sk. XXXX 4. SERVICES 4.1 Contractor shall during the Term provide IFR equipped helicopter(s) as required by the Charterer and Contractor shall ensure that the helicopter(s) is/are available and fully operational during the Term, for the exclusive use of Charterer and persons authorized by Charterer. The Helicopters should strictly conform to the Specification stipulated in Schedule -I Aviation Standards AS-4 enclosed at Schedule-II. 4.2 a) Charterer shall provide to the Contractor the Daily Flight Schedule by 6:00 pm of previous evening, and the Contractor's obligation shall be to provide non-schedule flight(s) not later than one (1) hour after the receipt of information thereof, from Charterer's Authorised Representative unless there are nay operational or regulatory limitations prohibiting or preventing such a flight or flight ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or not being satisfactory in operation or not being available for more than 48 hours, the Contractor shall provide replacement helicopter of the same specifications within 48 hours from the date time of requirement, at its sole risk and cost of Contractor including ferrying charges which may arise on this account. 13. PAYMENT 13.1 In respect of the Fixed Monthly Charges, Contractor shall prepare and submit an invoice five days in advance of beginning of the month to which they relate and Charterer shall pay the amount of such invoice within 15 working days of receipt thereof from Contractor. 13.2 In respect of Hourly Flying Charges and other miscellaneous charges, the Contractor shall prepare and submit an invoice by 7 th of the month with particulars of all flying done during the preceding month. The Charterer shall pay the amount of such invoice within 15 working days of its receipt. XXX (5) It can be observed from the above terms and conditions that ONGC intended to hire for their offshore operations AS-4 compliant 9 helicopters with specified call signs for a period of three years. Specifications of the helicopters for Charter hire are given in Schedule I Sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... early fall in entry (zzzzj) as supply of tangible goods for use and not under entry (zzzy) as mining services. The ratio of the said judgment is applicable to the facts of the present case as the appellant has given helicopters on time charter basis to oil and gas producers without parting with the right of possession and effective control of such helicopters. (7) As regards the appellant's contention that the service provided by them was covered under 'transport of passengers by air , Service Tax was introduced on air travel with effect from 1-5-2006 as a separate category on all premium classes of air travel vide sub-clause (zzzo) of Clause (105) of Section 65 of the Finance Act, 1994. Clause (zzzo) of Section of the Act, before it was amended was as follows:- (zzzo) to any passenger, by an aircraft operator, in relation to scheduled or non-scheduled air transport of such passenger embarking in India for international journey, in any class other than economy class. Explanation 1: For the purposes of this sub-clause, economy class in an aircraft meant for scheduled air transport of passengers means,- (i) Where there is more than one class of travel, the class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed for 'Non-schedules passenger service' since it did not satisfy the requirement for the same. (10) Issue of classification of hiring of chartered aircrafts under Supply of Tangible Goods service vis-a-vis Air Transport Passenger service came up for consideration before the Tribunal in the case of Karnavati Aviation Pvt. Ltd., Vs. Commissioner of Service Tax, Ahmedabad 2013 (30) S.T.R. 89 (Tri. -Ahmd.). The Hon'ble tribunal observed that where payment was not based on number of passengers, no tickets were issued, no charges were collected from passengers and right to possession and effective control of the aircraft was not parted with, service has to be considered as supply of tangible goods. (11) In the case of Adani Gas Ltd., Vs. Commissioner of Service Tax, Ahmedabad [2012 (28) S.T.R. 170 (Tri-Ahmd.)], the appellant had supplied pipes and measuring equipment like gas meters at the time of new gas connection to the customers in their business of distribution of CNG. Non-payment of rent on the said goods made the appellant entitled to re-possession of the goods. The appellant was also responsible for repair and maintenance. It was held that the appellant was in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interested in charter hiring of helicopters for offshore operations being carried out by them and the appellant agreed to provide the required services against the corporation's order in this regard. As per clause 3 of the agreement the appellant undertook to deliver/mobilize the helicopters at charterer's helibase in Mumbai or at other bases in India as may be designated by the charterer in fully operational condition for the charter service. In clause 4 relating to service, it was provided that the appellant shall ensure that the helicopters are available and fully operational for the exclusive use of the charterer and the persons authorized by the Charterer and the daily flight schedule was to be provided by the charterer. The contract also envisaged that the appellant shall provide experienced IFR licensed aircrews for the operation and qualified maintenance crews for servicing of the helicopters as per the prescribed standards. Passengers and/or cargo as required by the Charterer was to be carried in the helicopter. All necessary clearances, permission to hold helicopter licence to operate the helicopter, compliance with all laws, rules, regulations, orders, standards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome under the purview of supply of tangible goods for use as defined in Section 65 (105) (zzzj) of the Finance Act, 1994. 6.3 The hon'ble Apex Court in the case of Super Poly Fabriks Ltd. vs. Commissioner [2008 (10) STR 545 (SC)], laid down the principle of how to read an agreement or contract as under:- There cannot be any doubt whatsoever that a document has to be read as a whole. The purport and object with which the parties thereto entered into a contract ought to be ascertained only from the terms and conditions thereof. Neither the nomenclature of the document nor any particular activity undertaken by the parties to the contract would be decisive. If this principle is applied in reading the contracts entered into by the appellant with their clients, it is seen that the contract is for charter-hiring of the helicopters and not for flying of passengers/cargo. 6.4 The Hon'ble High Court of Bombay, in a case of charter hiring of vessel for offshore oil operations, considered an identical issue in Indian National Ship Owners Association Vs. UOI. The question before the Hon'ble High Court was whether the transaction involved in charter hiring of vessels fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plying the above conclusions to the instant case, we hold that the services rendered by the members of the 1st petitioner are either premining or post mining activities. They have no direct relation to mining. They were, therefore, rightly not brought to tax till entry (zzzzj) was introduced to cover transport of tangible goods by sea without transferring right of possession and effective control thereof. The services rendered by the members of the 1st petitioner are covered by entry (zzzzj) because they inter alia supply vessels offshore support vessels, barges, tugs etc. without transferring right of possession and effective control over them. In contrast entry (zzzy) was introduced to comprehensively bring under the service tax net activities having a direct nexus to mining activities. Entry (zzzzj) is not a carve out of entry (zzzy). Both entries are independent. Entry (zzzzj) was not inserted into the Finance Act by amending entry (zzzy). It is not possible to invent a remote connection of the services rendered by the members of the 1st petitioner to mining activities and hold that they fall in entry (zzzy). Entry (zzzzj) is not a specie of what is covered by entry (zzzy). Nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the agreement, Heligo would reimburse the actual costs incurred by the assessee in sourcing and acquiring spares for maintenance of the helicopter. The necessary infrastructure for maintenance of the helicopter would also be provided by Heligo. The entire cost of insurance to cover all liabilities in respect of passengers, cargo, crew, helicopter and third party would be incurred by the assessee and reimbursed to them by Heligo. Heligo would also pay monthly remuneration to the pilots of the assessee. They would also bear the costs of maintenance of the helicopter and also the costs of fuel and comsumables required for its operation. On a perusal of the charter-hire agreement between the assessee and Heligo, we find that Heligo chartered/hired the helicopter for their exclusive use and they incurred the entire costs of operation and maintenance of the helicopter and even the cost of insurance to cover all liabilities. One significant term of the contract was that the helicopter shall be utilized solely for the purpose of providing the services pursuant to the agreement and the contractor shall not utilize the helicopter for any other purpose without the prior consent of the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t service undertaken between the same two or more places and operated according to a published time table or with flights so regular or frequent that they constitute a recognisably systematic series, each flight being open to use by members of the public; [underlining added] The learned counsel for the appellants has argued that two distinct requirements have to be satisfied by an air transport service to be called scheduled air transport service . According to him, the two essential requirements are the follow ing : (a) there must be regular or frequent flights or flights operated according to a published time table between the same two or more places; (b) each flight must be open to members of the public. The learned counsel has argued that any air transport service that does not meet the above two requirements will be a non-scheduled (passenger) service. On this basis, it has been claimed that the assessee was providing non-scheduled (passenger) service under the permit granted by DGCA and was thereby complying with condition No. 104. This argument is fraught with analytical error. Any such dissection of the definition of scheduled air transport service as attempted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tracts with third party companies in respect of the aircraft which was accordingly used for transporting the personnel of these companies) and the copter operations were not open to members of the public. Where the helicopter would not come within the meaning of passenger aircraft , the flight operations cannot be called non-scheduled (passenger) services . The ratio of the above decision would apply squarely to the facts of the case before us. As can be seen, the service provided by the appellant cannot be covered by transport of passengers by air services since in that case, the definition specifically provides that the service is in relation to scheduled or unscheduled air transport of passengers. The thrust in the definition is on transport of passengers. In the case of the appellant, the service is provided to various companies, who chartered the aircraft for specific time or for specific journey. The payment is not based on number of passengers. No tickets are issued to the passengers and no charges are collected from the passengers. Therefore, the service provided cannot be considered as transport of passengers, but has to be considered as charter of aircraft. There i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the activity is transportation of persons in India by air and not supply of tangible goods for use. As against this decision, there are three other decisions of the Tribunal in the case of United Helicharters Ltd., Karnavati Aviation Pvt. Ltd., and Adani Gas Ltd. (supra) where a contrary view has been taken by this Tribunal at the interim stage. Since these are only prima facie views, they are neither binding nor do they have any precedential value. Therefore, the decision of the Tribunal in the case of King Rotors Air Charter Pvt. Ltd. case (supra) and the of the Hon'ble High Court of Bombay in Indian National Ship Owners Association affirmed by the Hon'ble Apex Court have to prevail. Accordingly, we uphold the demand of service tax under the category of supply of tangible goods for use as defined in section 65 (105) (zzzzj) of the Finance Act, 1994. We also uphold the confirmation of service tax demand on the repairs and maintenance services undertaken by the appellant and the man-power supply services rendered by the appellant. 6.8 The appellant has raised a point that the consideration received should be treated as cum tax and the amount so received shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be proved for imposition of penalty under Section 76 as held by the Hon'ble High Court of Kerala in the case of Krishna Poduval -2006 91) STR 185 (Ker). Further, the hon'ble Apex Court in the case of Chairman SEBI vs. Shriram Mutual Fund another [CIVIL APPEAL NOS. 9523-9524 OF 2003] held that - In our considered opinion, penalty is attracted as soon as the contravention of the statutory obligation as contemplated by the Act and the Regulation is established and hence the intention of the parties committing such violation becomes wholly irrelevant. A breach of civil obligation which attracts penalty in the nature of fine under the provisions of the Act and the Regulations would immediately attract the levy of penalty irrespective of the fact whether contravention must made by the defaulter with guilty intention or not. We also further held that unless the language of the statute indicates the need to establish the presence of mens rea, it is wholly unnecessary to ascertain whether such a violation was intentional or not. Therefore, we uphold the penalties imposed under Section 76 of the Finance Act, 1994 on the appellant. Similarly, the penalty under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to be paid under section 78 to ₹ 12,21,24,141/-. 7. To sum up, we hold that the services rendered by the appellant in charter hire of helicopters to various corporate for offshore operations is classifiable under supply of tangible goods for use service. Consequently we uphold the demand of service tax under the said category along with interest thereon. However, wherever the appellant has not collected service tax separately from the customers, the consideration received shall be treated as cum-tax and the service tax demand ought to be recomputed. The claim of the appellant for payment of ₹ 10,31,53,803/- towards service tax dues shall be verified and if found correct, the same shall be deducted from the amount due from the appellant. We also uphold the denial of cenvat credit taken of ₹ 2,33,09,951/-. The appellant shall forthwith reverse the said credit, if not already done. The appellant shall also be liable to pay interest on the credit wrongly availed from the date of taking the credit to the date of reversal in accordance with law. We also uphold the imposition of penalties under sections 76 and 77 of the Finance Act, 1994 for the default in paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x, as they disputed the leviability. (i) The appellant in the circumstances sought legal opinion and was advised that Service Tax is not payable under the head 'SOTG' rather the service qualifies under the head - 'Air Transport of Passenger' Section 65(105) (zzzo). This stand was taken in the reply to show-cause, aas well as in the statement recorded and also as early as vide correspondence dated 19.01.2009. (j) The consideration for the service is partially fixed (time basis) and partially variable (flying hours basis), which element indicates attraction of liability either as 'SOTG' or as Air Transport of Passenger' service. (k) Question(s) of interpretation and or classification are involved. (l) 'SOTG' is a new service introduced, and issue of classification are bound to take place. (m) Appellant have suo-moto accepted liability under the head 'Travel Service of Passengers by Air' Section 65 (105) (zzzo), as made subsequently applicable in case of domestic journey and paid the Service Tax. 10. That in view of the aforementioned facts, no case of contumacious conduct, fraud or deliberate defiance of law is made out a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T 369 (Guj)], and the Larger Bench decision in the case of Union Quality Plastics Ltd. Appeal No. E/1762 to 1765/2004, E/635, 636/2008; OR ii) The appellant is not liable to penalty under Sections 76 78 of the Finance Act, 1994 on the ground that there was reasonable cause on the part of the appellant in non-payment of service tax as held by the Hon'ble Member (Judicial) 16. It is to be noted that the reasons for imposition of penalty under Section 76 of the Finance Act, 1994 are elaborated by Member (Technical) in para 6.12 and for penalty under Section 78, in para 6.14. On the other hand, Member (Judicial) has elaborated his views in para 9 for not imposing the penalty under the said two Sections. 17. In order to appreciate the facts with reference to the penalty, following details would be helpful:- Sr. No. Details of SCN Period Penalty imposed in the O-in-O 1 SCN No. ST/HQ.AE/A/23/2009 dated 7.10.2009 16 th May 2008 to March 2009 U/s 78 2 SCN No. ST/MUM/Dn. III/ Gr. VIII/Global/49/09 dated 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceding financial year, the period of thirty days shall be extended to ninety days. (2) 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 that in case where the service tax 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 second proviso to sub-section (1), 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 or ninety days, as the case may be, of communication of the order by which such increase in service tax takes effect: Provided further that if the penalty is payable under this section, the provisions of section 76 shall not apply. Explanation.- For the removal of doubts, it is hereby declared that any amount paid to the credit of the Central Government prior to the da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 78 and the Revenue has not come in appeal against the said order. Therefore, non-imposition of penalty under Section 76 has reached finality as far as the first show cause notice is concerned. 19. As far as imposition of penalty under Section 76 in respect of show cause notices dated 5th October 2010 and 12th October 2011 is concerned, it is to be noted that the period involved in these two show cause notices is from April 2009 to March 2011. It is also to be, noted that the legal opinion was taken by the appellant as early as 22 nd October 2008 and the Revenue had started investigation and recorded the statements of the appellant in January 2009. In fact, the appellant also paid part of the duty on 22nd January 2009 and on various dates, during February, March etc. of 2009. Thus, from January 2009 onwards it was very clear to the appellant that the duty is required to be paid under the supply of tangible goods' category. This was also in accordance with their understanding from May 2008 itself. Section 76 of the Finance Act, 1994 reads as under:- 76. Penalty for failure to pay service tax. - Any person, liable to pay service tax in accordance with the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allans, it would be seen that the appellant is paying part amount of the duty and for the remaining of the duty, they are failing. Section 80 of the Finance Act reads as under:- 80. 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 provisions, if the assessee proves that there was reasonable cause for the said failure. It would be seen from the said Section that it is for the appellant to prove that there was reasonable cause for the said failure. In the present case while there can be arguments or reasons for the period upto March 2009 for failure to pay the duty, there does not seem to be any valid ground for non-payment of duty after April 2009. In view of the said position, in my considered view, penalty for the period April 2009 to March 2011 cannot be waived under Section 80 of the Finance Act. 20. During the hearing, learned senior Counsel for the appellant has quoted the following judgments:- (1) Petronet Industries Ltd. vs. CCE ST reported in Service Tax Appeal No.745 of 2012; (2) Reliance Industries Ltd. vs. CCE ST reported ..... X X X X Extracts X X X X X X X X Extracts X X X X
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