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TMI Blog2018 (9) TMI 825X X X X Extracts X X X X X X X X Extracts X X X X ..... under proviso to Section 73(1) of the Finance Act, 1994, appropriation of amounts totalling to Rs. 4,48,31,422/- paid up by the appellants on various dates, interest from due date of payment till the actual date of payment and imposition of penalties under Section 76 , 77 and 78 of the Finance Act, 1994. In adjudication, vide the impugned order 39/2011 dt. 28.09.2011, the Commissioner confirmed the service tax, appropriation of paid up amounts, imposition of penalties under Section 76 and 77, however, refrained from imposing penalty under Section 78 of the Act. Appellants are aggrieved by imposition of penalty under Section 76 and 77 ibid., and have preferred this appeal. 2.1 Today when the matter came up for hearing, on behalf of the appellant, Ld. Advocate Shri J. Shankaraman, made oral and written submissions which can be broadly summarized as under: (i) The Service Receivers of the Appellant Company were taking more than six months for settling the bills of the appellant which caused delay in discharging service tax liability. The appellant had to pay PF and ESI to the Manpower Supplied, on a monthly basis, apart from making payments to the Manpower supplied. This created a h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgment of the Hon'ble High Court of Karnataka in the case of C.C.E. Vs. Adecco Flexione Workforce Solutions Ltd. [2012 (26) S.T.R. 3 (Kar.). Hence, the penalty imposed under Section 76 & 77 of the Finance Act, 1994 is not sustainable in law. (iv) In any case, the appellant was wiping out the arrears of tax, interest and also penalty for the period prior to the present demand and it was not being used for furtherance of business and this resulted in belated payment of tax in the disputed period. Hence, the appellant prays that imposition of penalty under Section 76 is not proper and the Commissioner ought to have exercised his discretion in terms of Section 80 of the Finance Act, 1994. (v) The appellant prays reliance on the decision of the Hon'ble Tribunal in the case of Vista Infotech Vs. C.C.E. [2010 (17) S.T.R. 343 (Tri. - Bang.)] and C.C.E. Vs. J. K. Insulations [2017 (4) G.S.T.L. 282 (T)] in support of waiver of penalty. 2.2 He relied upon the following decisions: (i) C.C.E. & S.T., LTU, Bangalore Vs. Adecco Flexione Workforce Solutions Ltd., 2012 (26) S.T.R. 3 (Kar.) (ii) Commissioner of Cus. C. Ex. & S.T., Guntur Vs. Narasaraopet Municipality, 2015 (39) S.T.R. 800 (A.P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n facts of the case, the appellants can be extended the beneficial provision of Section 80 of the Act so as to waive the penalties imposed on them under Section 76 and 77 ibid. 5.2 To analyse this issue, it would be useful to properly interpret the provisions of erstwhile Section 80 of the Act as it stood during the period of dispute. "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 provisions, if the assessee proves that there was reasonable cause for the said failure." The important take-away from these provisions is that to be eligible under waiver of penalty under Section 80 ibid., the assessee should prove "that there was reasonable cause for the failure to discharge service tax liability" in the manner as specified. 5.3 We note that the appellants, right from the stage of adjudication, have been submitting that the delayed payment of service tax is on account of the chain reaction caused by the delay in the prior period, which started from September, 2006; that the reason for delayed payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 24/2009 dated 28.07.2009. Further, it seen from the letter dated 26.02.2009 that the SIR Branch of Service Tax Commissionerate has visited the premises of the assessee on 26.02.2009 and advised them to pay service tax period upto January 2009. Further, there is a sufficient force in the argument of the assessee that if they had intention to evade payment of service tax they would have equated the payments from August 2008 to the respective future months and could have avoided being proposed for penalization for the second time. IT is also seen from the chain of events as narrated by the assessee that after wiping out the arrears of service tax of Rs. 3.53 crores, interest of Rs. 52.46 lakhs and penalty of Rs. 88.33 lakhs as per Order in Original No.24/2009 dated 28.07.2009, they have paid the current arrears of tax of Rs. 4.39 crores in instalments within a period of 6 months. Therefore, except for the delay in payment of service tax and non filing of ST-3 returns in time, there appears to be very little evidence by the department to allege that the assessee has intention to evade payment of service tax. Further, the intention to evade payment of tax or otherwise can be decipher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining penalties that may have been imposed by the adjudicating authority. The Ld. AR had argued that financial hardship cannot be taken as a "reasonable cause" for the purposes of Section 80. In the peculiar facts of this case, the appellants, for the disputed period, were always one step behind in paying up their tax liabilities, since they were paying up the arrears built up for the previous periods. This is the fact which has been taken cognizance of and found correct by the adjudicating authority also. The Department has also not called any evidence that the appellant had sufficient financial reserves and were not monetarily strained. In any case, one must take into account the mitigating factor that appellants have paid up the tax liability in full, although belatedly. The assessee who has paid up the tax liability, even if belatedly, should surely be treated differently and on a different pedestal than another assessee who has not discharged such liability even after being pointed out by the Department and instead, has chosen to litigate the matter. It has also to be considered that in case there is a positive finding under Section 78 of the Act ibid. (fraud, collusion, suppr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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