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TMI Blog2020 (1) TMI 762X X X X Extracts X X X X X X X X Extracts X X X X ..... period of limitation is upheld. Demand of interest - HELD THAT:- Since the demand of tax has been upheld the demand for interest will follow. It is now settled law that interest under Section 75, is for delay in the payment of tax from the date when it was due. Since appellants have failed to pay the said Service Tax by the due date interest demanded cannot be faulted - the demand of interest made under Section 75 of the Finance Act, 1994 is upheld. Penalty - HELD THAT:- It is now settled position in law that penalty under section 78 can be imposed only if the ingredients specified in the said section are present. The ingredients specified for invoking the Section 78 are identical to those specified for invoking the extended period of limitation as provided by Section 73 ibid - Since in respect of SCN, we hold that demand could have been made by invoking the extended period of limitation as provided by Section 73, we uphold the penalties imposed under Section 78 of The Finance Act, 1994. By not indicating the details of these transactions in the ST-3 returns as required under Section 70 of Finance Act, 1994 read with Rule 7 of Service Tax Rules, 1994, appellant have made t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 75 is paid within thirty days from the date of communication of this order, the amount of penalty liable to be paid under Section 78 shall be 25% of the service tax determined, provided this reduced penalty is also paid within the said period of thirty days. 2.1 During course of scrutiny of the records of Appellant it was observed that they were providing taxable services under the category of Business Support Services, and for providing these services they had taken office on rent at Pune in the name of Shri Ajay Kumar who was entrusted with the work of transportation of vehicles and deployed staff for such services. The expenses of office rent as well as salary of the office staff/ drivers was paid by the Appellants. 2.2 It was observed that they had made expenses towards the transportation of services provided by them to TML Distribution Company/ Telco/ Tata Motors. Huge amounts have been spent towards transportation of vehicles in respect of M/s Jaika Motors Ltd., Nagpur and shown in their ledger such expenses as transfer to the account of M/s Jaika Motors Ltd., Nagpur. Since M/s Jaika Motors, is not having its own office/ drivers for transport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Penalty should not be imposed the provisions of Section 78 of the Finance Act , 1994 for contravention of the provisions Section 67, 68 70 of the Finance Act, 1994 and Rules made there under for suppressing the taxable value, incorrect assessment of Service Tax liability and nonpayment of due Service Tax with intention to evade payment of service tax. 2.4 Show cause notice has been adjudicated by the Commissioner as per impugned order referred in para 1, supra. Aggrieved by the order of Commissioner, appellant s are in appeal before the tribunal. 3.1 In their appeal appellants have challenged the order of Commissioner stating that-. i. The amounts on which service tax has been demanded has been spent by Shri Ajay Kumar on transportation of the vehicles on behalf of M/s Jaika Motors Ltd. Since these amounts are reimbursement of expenses they are not liable to service tax. ii. Extended period of limitation for making this demand could not have been invoked. iii. No interest could have been charged and recovered from them under Section 75 and no penalties could have been imposed on them under Section 76, 77 78. 4.1 We hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reliance placed on decisions in case of Star India Pvt Ltd [2015 (38) STR 884 (T-Mum)] vi. Since appellants have evaded the payment of service tax by suppressing the facts from the department penalty under Section 78 has been rightly imposed. vii. Since appellants have not paid the service tax by the due date penalty under Section 76, till 10.05.2008 too is justified. viii. For various contraventions the penalty under section 77 is justified. 5.1 We have considered the impugned order along with appeals and submissions made during the course of arguments. 5.2 Undisputed and also as admitted by the appellants in their letter dated 07.01.2013 which was in response to the summons issued under Section 14 of Central Excise Act, 1944 which by Section 83 of Finance Act, 1994 has been made applicable to service tax matters, M/s Jaika Motors Nagpur is not having any office of their in Pune, Appellants have allowed them to use their office premises without charging any rent. No rent agreement was made available. The work of taking delivery of vehicle from the premises of vehicle manufacturers/ suppliers and then arranging for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ives indicative list of outsourced services. 5.4 From the definition of the Business Support Services as above and the clarification issued it is quite evident that the activities undertaken by the appellant clearly fall within the category of Business Support Services. Same view has been expressed by the tribunal in case of Capital Transport Convoy Contractor [2016 (41) STR 651 (T-Del)]. 5.5 Since the appellants had not disclosed the details of these transactions to the revenue in the ST-3 returns filed by them. Neither they have been able to establish any bonafides in non disclosure of such information to revenue. In case of Capital Transport Convoy Contractor, supra, tribunal has in similar circumstances held as follows: 9 . The appellant has contended that extended period cannot be invoked in respect of impugned order in appeal dated 25-2-2013 as the said order was in respect of show cause notice demanding Service Tax on same activity for subsequent period and cited the Supreme Court judgment in the case of Nizam Sugar Factory to support this proposition. While on the face of it there seems to be some traction in this contention, on closer examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of foreign advertisers the consideration was paid directly to Star Hong Kong, there cannot be any misdeclaration on their part. This contention is obviously wrong. In the ST-3 return, there was a column wherein the appellant was required to declare the amount charged to the service recipient, apart from the amount received. As per the agreement, dated 1-4-1999, SIPL was appointed as non-exclusive independent representative in the territory of India to solicit television advertising for the channels, namely, Channel V, Star World, Star Plus, Star News, Star Movies and such other channels as may be added in future and to collect and remit advertisement charges. The responsibility also included delivery of the invoices to the advertisers on a timely basis. Thus the appellant obviously knew the amount charged for the broadcasting services. Section 70 of the Finance Act, 1994, mandated that - Every person liable to pay the Service Tax shall himself assess the tax due on the services provided by him and shall furnish to the Superintendent of Central Excise, a return in such form and in such manner and at such frequency as may be prescribed. Thus the appellant was operating under self-a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department. In simple terms, the Department could recover unpaid duty up to a period of five years anterior to the date of service of notice when the case falls under proviso to sub-section (1) and such omission is on account of fraud, collusion, wilful misstatement, etc. Thus in our considered view, the invocation of extended period of time for confirmation of demand is fully justified and we hold accordingly. Hence we uphold the impugned order for invoking extended period of limitation. 5.7 Since the demand of tax has been upheld the demand for interest will follow. It is now settled law that interest under Section 75, is for delay in the payment of tax from the date when it was due. Since appellants have failed to pay the said Service Tax by the due date interest demanded cannot be faulted. In case of P V Vikhe Patil SSK [2007 (215) ELT 23 (Bom)] Hon ble Bombay High Court has stated as follows: 10 .So far as interest u/s. 11AB is concerned, on reference to text of Section 11AB, it is evident that there is no discretion regarding the rate of interest. Language of Section 11AB(1) is clear. The interest has to be at the rate not below 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those specified for invoking the extended period of limitation as provided by Section 73 ibid. Since in respect of show cause notice, we hold that demand could have been made by invoking the extended period of limitation as provided by Section 73, we uphold the penalties imposed under Section 78 of The Finance Act, 1994. Hon ble Supreme Court has in case of Rajasthan Spinning and Weaving Mills [2009 (238) ELT 3 (SC)] held as follows: 23 . The decision in Dharamendra Textile must, therefore, be understood to mean that though the application of Section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section is applicable in a case the concerned authority would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under sub-section (2) of Section 11A. That is what Dharamendra Textile decides. 5.9 In view of various decisions of High Court/ Tribunal holding that penalty under Section 76 and 78 can be imposed simultaneously till the amendment of Section 78, with effect from 16.05.2008, we uphold the penalties imposed by the Commissioner, upto 16.05.2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should serve as a deterrent. The creation of an offence by Statute proceeds on the assumption that society suffers injury by and the act or omission of the defaulter and that a deterrent must be imposed to discourage the repetition of the offence. In the case of a proceeding under Section 271(1)(a), however, it seems that the intention of the legislature is to emphasise the fact of loss of Revenue and to provide a remedy for such loss, although no doubt an element of coercion is present in the penalty. In this connection the terms in which the penalty falls to be measured is significant. Unless there is something in the language of the statute indicating the need to establish the element of mens rea it is generally sufficient to prove that a default in complying with the statute has occurred. In our opinion, there is nothing in Section 271(1)(a) which requires that mens rea must be proved before penalty can be levied under that provision. We are supported by the statement in Corpus Juris Secundum Volume 85, page 580, Paragraph 1023 : A penalty imposed for a tax delinquency is a civil obligation, remedial and coercive in its nature, and is far different from the penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of suppression deserves such sympathy. As such, we are of opinion that the learned Single Judge was not correct in directing the 1st appellant to modify the demand withdrawing penalty under S. 76. Therefore, the judgment of the learned Single Judge, to the extent it directs the first appellant to modify Ext. P1 by withdrawing penalty levied under S. 76, is liable to be set aside and we do so. The cumulative result of the above findings would be that the Writ Petitions are liable to be dismissed and we do so. However, we do not make any order as to costs. Same view was again expressed by Kerala High Court in case of Lawson Travel and Tours (I)(P) Ltd [2015 (37) ELT 183 (Ker)] as follows: 5 . What we notice is, the liability to pay Service Tax is in accordance with the Finance Act, 1994, as the taxable services involved in the matter was for the period from April, 2000 to March, 2004. The decision of this High Court referred above in Krishna Poduval s case (supra) was also prior to Finance Act, 2008, which made a remarkable distinction between Sections 76 and 78 of Service Tax Act. As the period in question relates prior to Finance Act, 2008, the assessing aut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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