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TMI Blog2008 (7) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... ach of the cases he has imposed the penalties and enhanced the same in terms of the impugned orders. 2. The learned Counsel submits that the issue is no longer res integra and that in identical matters pertaining to same type of service tax payers, the issue was examined by this Bench in 13 appeals in the case of Majestic Mobikes (P.) Ltd. v. CCE [2008] 16 STT 296 (Bang.-CESTAT) after due examination of the matter, similar orders were set aside and as a consequence penalties imposed were set aside. He produces a copy of this order. 3. The learned SDR submits that the issue requires a re-look as the Revisional Authority was justified in imposition of penalty or enhancing the same as the case may be in the light of the Karnataka High Court judgment rendered in the case of CCE&ST v. First Flight Couriers (P.) Ltd. [2008] 12 STT 127 (Kar.) wherein it was held that although the Original Authority is empowered to consider the aspect pertaining to the imposition of penalty yet the power of the Review Authority to revise the order subsists and it cannot be disturbed by the Tribunal. She prays for dismissing the appeal. 4. I have carefully considered the submissions. I notice that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section unless the assessee has been given an opportunity of being heard. (3) The Commissioner of Central Excise shall communicate the order passed by him under sub-section (1) to the assessee, such adjudicating authority and the Board. (4) No order under this section shall be passed by the Commissioner of Central Excise in respect of any issue if an appeal against such is pending before the Commissioner of Central Excise (Appeals). (5) No order under this section shall be passed after the expiry of two years from the date on which the order sought to be revised has been passed.' 11.1 We would also like to reproduce section 73 of the Finance Act. '73. Recovery of service tax not levied or paid or short-paid or erroneously refunded.- (l) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the Central Excise Officer may, within one year from the relevant date, serve notice on the person chargeable with the service tax which has not been levied or paid or which has been short-levied or short-paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the amount of service tax or interest not being in excess of the amount partly due from such person.' (3) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person chargeable with the service tax, or the person to whom such tax refund has erroneously been made, may pay the amount of such service tax, chargeable or erroneously refunded, on the basis of his own ascertainment thereof, or on the basis of tax ascertained by a Central Excise Officer before service of notice on him under sub-section (1) in respect of such service tax, and inform the Central Excise Officer of such payment in writing, who, on receipt of such information shall not serve any notice under sub-section (1) in respect of the amount so paid: Provided that the Central Excise Officer may determine the amount of short payment of service tax or erroneously refunded service tax, if any, which in his opinion has not been paid by such person and, then, the Central Excise Officer shall proceed to recover such amount in the manner specified in this section, and the period of 'one year' referred to in sub-section (1) shall be counted from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Many a time the service providers are not clear as to whether the service provided by them is taxable or not. The CBEC also issues circulars clarifying the law. Even at the time of introduction of the service tax, the Government of India emphasized the culture of voluntary compliance. In other words, the Government was against draconian provisions in practice. Even though some harsh provisions are in the statute book, a close reading of the various provisions indicate that the intention of the Government is not to impose heavy penalties in respect of service providers for various lapses. When they pay up the tax short-paid along with the interest. Section 73 deals with recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded. The normal period for demanding a short-paid tax is one year. However, when there is fraud or suppression with intent to evade payment of service tax, the department has got five years for issuing the show-cause notice. Obviously, the above provisions are for the recovery of taxes, which had not been paid. There is an Explanation below section 73(1). In terms of the Explanation, even in cases of suppression of facts with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable for tax, the tax along with interest was paid. The very action of the appellant has shown that he is ready to comply with the law. Under such circumstances, the Original Authority is of the view that waiver of penalties under sections 76 and 77 can be given in terms of section 80 and also imposition of a nominal penalty under section 78. In our view, the order of the Original Authority is well reasoned and is not at all arbitrary. The tax paid is to the tune of Rs. 6,68,945, whereas the penalty imposed by the Revisionary Authority is Rs. 10,00,000. It is very clear that imposition of such a huge penalty on an assessee who voluntarily complies is uncalled for and very much goes against the spirit of the various provisions of the Finance Act, 1994 relating to service tax which we have earlier quoted. In our view the Revisionary Authority has exercised his powers for the reason that legally he has the powers. Such power has been exercised ignoring the various provisions already existing in the Finance Act. Even in cases of suppression if an assessee pays the tax along with interest and 25 per cent penalty, the proceedings are closed. Therefore, what is the justification for imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay the service tax on account of ignorance of law. There is no intention to evade payment of duty. When such facts are on record, no further action on the part of the appellant to prove reasonable cause is warranted. What is reasonable cause? The Supreme Court in Motilal Padampat Sugar Mills Co. Ltd v. State of Uttar Pradesh [1979]118 ITR 326 held that 'it is well settled law that reasonable cause' can be reasonably said to be a cause which prevents a man of average intelligence and ordinary prudence acting under normal circumstances without negligence or inaction or want of bona fide. In all the cases decided under revisionary powers by the Commissioner of Service Tax, Bangalore a penalty under section 78 has been enhanced to savage proportions. In the case of Sri Rama Enterprises the service tax involved is Rs. 39,334, the Commissioner has enhanced the penalty under section 78 from Rs. 2,000 to Rs. 59,000. This is not at all justified. The logic of the Commissioner is that the Original Authority confirmed the demand because of suppression of facts. Therefore, severe penalty in terms of section 78 is warranted. He has recorded that the maximum penalty which can be levied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest was paid well before the issue of show-cause notice. Hence, in all the cases, in Serial Nos. 1 to 14 excepting Serial No. 12 we set aside the impugned order in revision and restore the order in Original. 18. As regards Serial No. 12 with regard to N.C.S. Storage System it is seen that the service tax was paid only after the issue of show-cause notice. In these circumstances, non-imposition of penalties under sections 76 and 78 is not justified. However, keeping in view the fact that the service tax was paid before the adjudication we reduce the penalty under section 78 to Rs 10,000. Otherwise we uphold the order in revision in respect of N.C.S. Storage. 19. In respect of appeal in Serial No. 15 of the above tabular column namely A.R. Travels it has been pleaded that due to ignorance with regard to the Service Tax Laws the appellant did not pay the tax in time. Once the lapse was pointed out by the Departmental officer, the tax along with interest was paid before the issue of show-cause notice. Further, the appellant has stated that all matters relating to contracts purchased and income-tax etc. were looked after by an accountant. The appellant being illiterate could not un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er appeals, enhancing penalty by the Revisional Authority is not justified. Respectively following the ratio of the extracted order in the case of Majestic Mobikes (P.) Ltd. (supra) the impugned orders are set aside and appeals allowed with consequential relief. Appeal No. 228/2007 8. This appeal arises from Order-in-Appeal No. 347/2006-CE, dated 11-12-2006 by which duty has been confirmed as the assessee has not maintained separate accounts in respect of the goods manufactured by them carrying nil rate of duty and as well as rate of duty. The exemption available under Serial No. 71 of Notification 6/2000-CE, dated 1-3-2000 has been denied. 9. The revenue has proceeded against the appellants on the allegation that they are required to pay 8 per cent of the value of the finally exempted goods in terms of rule 6 of CE Rules in view of the fact that they have not maintained separate accounts. The appellants' contention is that they have reversed the credit and therefore they are not required to pay 8 per cent of the value. In this regard appellants relied on large number of citations including the Apex Court judgment rendered in the case of Charndrapur Magnet Wires (P.) Ltd. v. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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