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TMI Blog2017 (10) TMI 455X X X X Extracts X X X X X X X X Extracts X X X X ..... the statute. Therefore by not paying the dues, the company admittedly contravened the provisions of the chapter of Finance Act,1994 and rules made thereunder. As regards individual persons, in the present case, directors and employees of the KAL are not liable to discharge the service tax liability of KAL, therefore the appellants have not contravened the provisions of Act or rules made thereunder. Rule 26 of CER, 2002 is invokable on the individual person for the specific acts of the individual person prescribed therein. Under this rule a person, other than an assessee, can be penalised. Unlike this rule 26, there is no pari materia rule in the chapter of the Finance Act, 1994 or in the Rules made thereunder. Despite existing of Rule 26, a Rule 27 was made to penalise the assessee, which is pari materia to Section 77(2) of the Finance Act, 1994. Therefore in absence of similar provision of Rule 26 of Central Excise Rules, 2002 in the Finance Act, 1994 or rules made thereunder, no personal penalty on individual person can be imposed in connection with evasion of service tax by the assessee (KAL). For service tax matters, when legislators thought deem fit that individual pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other hand, Shri. Roopam Kapoor, Ld. Commissioner(A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He made following submission: (a) The Advocate for appellant, in their submissions has sought to rely upon the judgment of Hon ble Bombay High Court in the case of S.L.Kirloskar Vs. UOI. Said judgment is not applicable in the instant case as the relevant section of the Central Excise Act which has been examined by the Hon ble Court uses the word 'manufacturer'. There is no doubt about the proposition that if the word used is either 'manufacturer' or 'any other person who is liable to pay service tax..... (which has been used in Sec 77(a) of the Finance Act, 1994) would not make an individual liable for penal action. It was submitted during the course of hearing that Sec 77(b), as well as Sec 77 (c) (i,ii,iii) does not deal with either manufacture or any person who is liable to pay Service Tax but makes any person who violates the provisions of the Act liable to penalty. This penalty is equivalent to the general penalty under Central Excise Act or Customs Act liable to be imposed wherever a specific penalty has not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion on Director under the provisions of Finance Act 1994. (f) The case of M/s. United Enterprises Vs. Commissioner of Central Excise Service Tax, Patna [2013 (29) STR 605 (Tri-Kolkata)], was also brought to the notice of the Bench wherein the Co-ordinate Bench at Kolkata had, while setting aside the penalty on the Director, had observed that the said penalty is set aside as Both the authorities below have not recorded specific involvement of Shri Atul Jain in the short/non-payment of Service Tax warrants the personal penalties against him -------- . It is submitted that in the current case specific involvement of the individual have been clearly brought out in investigation as well as in the SCN and OIO. It is also submitted that the findings of the Commissioner as regards the definition of any person was also reiterated. In view of the above submission of the Ld. A.R. he placed reliance on the following judgments: (a) Hatkesh Cooperative Housing Society Ltd V/s. Assistant Commissioner of Income Tax[2016-TIOL-2073-HC-MUM-IT] (b) M/s. Kripa Outdoor Publicity Vs. CESTAT, Chennai[2016-TIOL-132-HC-MAD-ST] 4. We have carefully considered the submissions mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From the adjudication order, it is seen that no provision of law was quoted therein which binds the present appellants to follow certain legal provisions of the act and/or rules made thereunder. In this position, next question arises, then on whom the provision of section 77(2) shall apply. The simple answer is the person who is legally bound to comply the various provision of chapter of Finance Act,1994 and/or rules made thereunder. As regards provisions of the chapter of Finance Act, 1994 and/or rules made thereunder it is meant for levy of service tax and prescribed procedures therefore. The person liable for payment of service tax and compliance of various provisions is that person who is liable to pay the service tax and to comply the prescribed procedure under the rules. Therefore for the purpose of Section 77(2) of the Finance Act, 1994, in the present case the person, who is laible to pay service tax and to comply the provisions therefor, is the company M/s Kingfisher Airlines Ltd and no one else. The purpose of the Section 77(2) is to impose penalty on the tax payer, in case the assessee contravenes any of the provisions and/or rules, if not provided separately. For exampl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, be punishable with a penalty which may extend to five thousand rupees and with confiscation of the goods in respect of which the offence is committed. From the above rules, it is found, Rule 26 is invokable on the individual person for the specific acts of the individual person prescribed therein. Under this rule a person, other than an assessee, can be penalised. Unlike this rule 26, there is no pari materia rule in the chapter of the Finance Act, 1994 or in the Rules made thereunder. Despite existing of Rule 26, a Rule 27 was made to penalise the assessee, which is pari materia to Section 77(2) of the Finance Act, 1994. Therefore in absence of similar provision of Rule 26 of Central Excise Rules, 2002 in the Finance Act, 1994 or rules made thereunder, no personal penalty on individual person can be imposed in connection with evasion of service tax by the assessee (KAL). 9. Similar to penal provision of Rule 26 of CER, 2002, in Customs Act, 1962 also separate penal provisions for individual person have been provided under Section 112/114AA of Customs Act and similar to Rule 27 of CER, 2002, in customs there is a provision under Section 117 for the assessee wihch is simil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the declared value and the value thereof or five thousand rupees], whichever is the highest. SECTION 114AA. Penalty for use of false and incorrect material. - If a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of this Act, shall be liable to a penalty not exceeding five times the value of goods. SECTION 117. Penalties for contravention, etc., not expressly mentioned. - Any person who contravenes any provision of this Act or abets any such contravention or who fails to comply with any provision of this Act with which it was his duty to comply, where no express penalty is elsewhere provided for such contravention or failure, shall be liable to a penalty not exceeding one lakh rupees. From the reading of the above customs provisions, it can be seen that though there is general penal provision under Section 117 for contravention of provision of the Act but for personal penalty on individual for their certain acts, separate penal provision under Section 112 and 114AA ..... X X X X Extracts X X X X X X X X Extracts X X X X
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