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TMI Blog2008 (11) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... aded Service Tax of Rs. 1,38,227 during the period 1-4-2000 to 31-3-2003 in respect of the reimbursements received by them from Intas for C & F services provided during the said period; that the appellants were issued with show-cause notice dated 10-10-2005 asking them to show cause as to why (i) Service Tax of Rs. 1,38,227 on reimbursement expenses for the subject period should not be demanded under section 73 of the Finance Act, 1994 (hereinafter referred to as 'the Act') and why amount already deposited vide TR-6 challan No. Nil dated 19-8-2003 should not be appropriated against the Service Tax liabilities; (ii) interest should not be demanded from them under section 75 of the Act; and (iii) penalty should not be imposed under section 76 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in-Original dated 14-6-2007 and rejected the appeal. Hence, this appeal. 3. Heard both the sides and perused the records. 4. At the outset, the learned counsel of the appellants madeit clear before me that they are not contesting the confirmation of service tax together with interest. However, they are aggrieved against the penalties imposed and, therefore, their present appeal is confined on the penalty aspect. Hence, I will confine my findings only with respect to the penalties imposed on the appellants. 5. The learned Counsel for the appellants relied on the following case laws: (1) CCE v. Lark Chemicals (P.) Ltd. [2006] 3 STT 376 (Mum.-CESTAT) in which it was held that section 80 ibid has overriding effect on sections 76,77,78 and 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, relied upon the following cases for sustaining the penalties imposed on the appellants: (i) Mett Macdonald Ltd. v. CCE [2007] 10 STT 473 (Delhi-CEGAT) in which it was held that when no disclosure of the fact of rendering consulting engineering service to Central Command Area (CAD) was made by the assessee to the Department, and only part of tax, liability to tax was otherwise not disputed, paid only after inquiry was conducted by the Department, plea that there was no material suppression is not tenable. The charge of suppression of material facts, and imposition of penalty under section 78 is sustainable. It was also held that the penalties under sections 76 and 77 are also sustainable. (ii) The Hon'ble Kerala High Court judgment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nses was not on actual basis. The pattern of commission was changed in September, 1997 and part of it was shown as reimbursement of expenses so as to save Service Tax which has become leviable on CFA's services at that time. However, when department detected this evasion in April, 2003, so from 1-4-2003 onwards we again changed the reimbursement of expenses to commission' 'We paid Service Tax on reimbursement from 1-7-1997 to 31-3-2000 at Ahmedabad. At the time of detection in April, 2003 IPL paid Service Tax to their CFA's on reimbursement of expenses from 1-4-2000 to 31-3-2003, which was deposited by respective CFA's. Details are enclosed.' 'Yes, we paid' (Service Tax on incentives for the period 1-4-2000 to 31-3-2003) 'Yes, I agree an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar that the gross amount charged by the appellants to Intas i.e., commission, reimbursement of expenses and incentive was leviable to service tax and deliberate attempt was made to avoid paying service tax by misdeclaring the C and F charges as reimbursement charges. Hence, penalties are imposable on the appellants separately under sections 76 and 78 for failure to pay service tax and for suppression of the value of taxable services in terms of Kerala High Court judgment in the case of Krishna Poduval (supra). However, for the service tax evasion of Rs. 1,30,227, penalty of Rs. 1,38,227 imposed under section 76 and penalty of Rs. 2,76,454 imposed under section 78 are very harsh. The Hon'ble Bombay High Court in the case of CCE & C v. Ashish ..... X X X X Extracts X X X X X X X X Extracts X X X X
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