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TMI Blog2016 (12) TMI 1279X X X X Extracts X X X X X X X X Extracts X X X X ..... umulated interest and penalty of 25% of the entire tax due, within the period indicated in the third proviso to Section 78(1). Appeal allowed - decided partly in favor of appellant-assessee. - SERTA 31/2016, C.M. APPL.44560/2016 - - - Dated:- 6-12-2016 - MR. S. RAVINDRA BHAT MR. NAJMI WAZIRI JJ. Appellant Through: Sh. C. Hari Shankar, Sr. Advocate with Sh. Paras Chaudhary, Advocate. Respondent Through: Sh. Sanjeev Narula, Sr. Standing Counsel with Sh. Abhishek Ghai, Advocate. MR. S. RAVINDRA BHAT (OPEN COURT) Admit. 1. The following question of law arises for consideration: Did the CESTAT and the authorities below fall into error in holding that penalty under Section 78 of the Finance Act, 1994 ( the Act ) imposed was justified and appropriate? 2. Issue notice of appeal. Sh. Sanjeev Narula, Sr. Standing Counsel accepts notice. With the consent of counsel, the appeal was heard today, finally. 3. The facts of the case are that the assessee provides business auxiliary services and has been functioning since long. It became liable to file service tax returns and deposit amounts towards that levy, with effect from 10.09.2004. It, however, claims ig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such compliance, the assessee would have to suffer 100% penalty. It was also contended that once the period is over, the authorities are powerless to waive the amount or reduce it; in support of this proposition, reliance was placed on the judgments reported as Exotic Associates vs. The Commissioner of Central Excise 2010 (252) ELT 49 (Guj); K.P. Pouches (P) Ltd. vs. Union of India (UOI) 2008 (238) ELT 31 (Del); Commissioner of Central Excise, Raigad vs. Castrol India Ltd.2012 (286) ELT 94; Sri Sai Enterprises Anr. vs. Commissioner of Central Excise 2013 (288) 40; Commissioner of Customs Central Excise vs. M/s. Majestic Auto Ltd.2013 (289) 95 (All). All these were considered by this court in an elaborate judgment, reported as Principal Commissioner of Service Tax v Top Security 2016 [41] S.T.R.612 (Del.). It was therefore, submitted that the question of leniency cannot arise; in the facts of this case, whatever be the reason, since the assessee did not comply with the condition of depositing the entire amount demanded with interest within the stipulated mandatory period, it could not avail the lighter penalty. Mr. Narula therefore, urged that this court should not inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions. However, it was the duty of ICICI Bank to inform me that these services were taxable as BAS and I would have been advised to charge service tax invoices separately or include the same in the invoice. Due to lack of proper professional advice and lack of personal knowledge I did not include service tax or any other tax in the invoices raised by me on IHFC. 5. As a law abiding Citizen I never failed to file my income tax returns and in my knowledge I was supposed to file only income tax return. If I had known in the beginning that Service Tax was payable I would have taken registration and charged service tax and paid tax accordingly. I came to know of the applicability of Service Tax on these services in year 2009 and then immediately got registered with Service Tax in my personal name vide no STCAYQP59048ESTOO1 under Business Auxiliary Services, w.e.f. 10.09.2009. 6. Since I had not charged Service Tax in the invoices raised on IHFC for the period prior to 10.09.2009 and liability to pay Service Tax for the past period was huge it became really difficult for me to pay taxes in lump sum. 7. From my bank statement it was obvious that I did not have sufficient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuments required for the purposes of assessment. I am ready to pay service tax with a prayer that interest may be waived and penalty may not be imposed. It is Prayed that considering the aforesaid facts and circumstances and the bona fide mistake committed inadvertently interest on tax may be waived and no penalty be imposed. It is further prayed that I may be given time to produce all the required documents and given personal hearing. For Future Link India Place: New Delhi Dated: 20.12.2012 Sd/- (Rajiv Sharma) 7. The adjudicating authority who considered the show cause notice and the reply thereto, however, declined the explanation furnished. It was held, in the order-in-original that: 5.3.8 It was also evident that the party had admittedly not disclosed the amount recovered. Further there was nothing on record produced or referred to by the party substantiating the element of bonafide in the correct applicability of Service Tax. There was no evidence on record which suggest that the department was made ever known about the difficulties in understanding the levy and payment of service Tax regarding the Impugned services. Further, it was the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory provisions. 5.3.10 It is needless to recapitulate that this case has arisen out of information leading to inquiry about the activities of the noticee. Had the inquiry not conducted the evasion of tax would not have been unearthed. This finds support from the ratio of the judgment and order delivered in the matter of Dugal Tetenal India Ltd. Vs. CCE reported in 2002 (147) ELT 578 (Tri-Del), wherein the Hon'ble Tribunal particularly mentioned that there was no evidence on record to show that the material fact relating to ownership of the brand name was known to the Department till their investigative results were available. In a Service Tax case, the Hon'ble Tribunal, in the matter of Insurance and Provident Fund Department Vs. CCE reported in 2006 (2) STR 369 (Tri-Del), negated the contentions of the appellants that they, being a Government organization, had no Intention to evade payment or duty and therefore, there was no mis-statement or suppression of facts so as to attract a longer period for confirming the demand; and that the extended period for demand could only be applied when some positive signals other than mere inaction or failure on the part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring cost. Accepting the findings at the lower authorities, the Hon'ble Supreme Court field that non-disclosure of receipt of those handling Charges amounted to suppression of facts and the extended period of 5 years was applicable. This judgment squarely covers the present case. 5.3.13 In view of the above discussions, I am of the view that the extended period as provided in proviso to Section 73 (1) of the Act ibid has rightly been invoked in this case and no portion of demand is beyond a period of five years from the relevant date. 8. As is evident, the adjudicating authority adopted a strict view disregarding the explanation furnished by the appellant. The assessee- which did not dispute its liability, was aggrieved by the direction to pay 100% penalty and approached the Commissioner (Appeals) and the CESTAT- both unsuccessfully. In somewhat similar circumstances, in Commissioner of Central Excise and Customs, Daman v. R.A. Shaikh Paper Mills Pvt. Ltd. 2010 (259) ELT 53 (Guj), it was held that if the assessee does not dispute its liability, the milder penalty prescribed by the proviso to Section 78 can be imposed by the High Court since the appellate proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant is right in contending that there was no suppression of material facts, or fraud or collusion, justifying invocation of the extended period of 5 years in this case. The court is here of the opinion that there is some substance and merit in the argument; in Uniworth (supra) there is an elaborate discussion about what constitutes fraud or willful suppression or misrepresentation in regard to short payment or non-payment of duty. The assessee in this case registered itself with the service tax authorities in 2009, i.e about 3 years before the issuance of the notice. Its defense regarding no knowledge about the inclusion of its business activity in the statute is quite probable; in any event there is no material pointing to deliberate inaction. At the same time, this court also notices that in all the decisions cited by the revenue, the assessees were aware of their liability; they were called to book for not disclosing the true figures or production in most cases, unlike in the present case, where the appellant claims not to have been aware of its liability before its registration, in 2009. However, at the same time, having regard to the phraseology of Sections 76 and 77 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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