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TMI Blog2023 (12) TMI 854X X X X Extracts X X X X X X X X Extracts X X X X ..... State Government undertaking vide work order dated 14.11.2005. Petitioner firm appointed 45 persons for carrying out the audit work with KSFC and KSFC were required to pay salary for 45 persons engaged in the said activity of audit work. KSFC delayed making the payment. During the period under consideration, which is subject matter of the present case, petitioner firm was required to pay service tax, only on receipt of service tax from KSFC. 3. The petitioner, in view of delay in receipt of payments from KSFC, made delayed payment of service tax with interest. However, the Department issued a show cause notice which was received by the petitioner on 08.08.2007 without there being any details of specific work attracting the service tax. The show cause notice was duly replied by letter dated 01.10.2007 and despite said reply, petitioner was served with the summons dated 18.09.2007 and the same was replied. 4. The show cause notice covered the period from April 2005 to September 2007. The Department acknowledged the payment of service tax by the petitioner on 16.08.2007 and 17.08.2007 and also acknowledged ST-3 returns on 20.08.2007 pertaining to the period from 2005-06 to 2006-07. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement in the order in original is incorrect inasmuch as in the very show cause notice RP No.384/2022 itself there is a mention that ST-3 returns has been filed by the petitioner and payment of service tax with interest. Therefore, it was the case of the assessee that levy of penalty under Section 78 of the Act is contrary to the facts of the case. 12. The Order levying the penalty was challenged before the Commissioner of Central Excise Appeals, Hon'ble Customs, Excise and Service Tax Appellate Tribunal. But the Review Petitioner failed to get the order of imposition of penalty, set aside. Ultimately, Review Petitioner challenged the order of imposition of penalty before this Court in CEA No.21/2018. This Court taking note of the fact that there was a letter issued by the KSFC, though the service tax was paid before issuance of show cause notice, it is the duty of the petitioner to pay the service tax in time, passed an order on 11.02.2021 whereby CEA No.21/2018 came to be dismissed and substantial questions of law framed by the Court were answered in favour of the Department and against the assessee. 13. Being aggrieved by the same, present Review Petition has been file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with law. This Hon'ble Court ought to have appreciated that the petitioner has not suppressed the facts of providing the services under the classification of practicing chartered Accountant. The Petitioner was registered with the department. The Service tax department is having knowledge about the activity of the Petitioner. Once if it is held that the petitioner has not suppressed the facts then the provisions of section 73(3) of the Act is applicable and the show cause notice cannot be issued in respect of the payments already made. The registration obtained by the Petitioner and the entire payment of Service tax along with interest for the dispute period is paid before issue of show cause notice. Consequently, there is no suppression of facts and there is no intention by the Petitioner to evade payment of tax. Even on this count the extended period of limitation cannot be invoked on the facts of the case of the Petitioner. The Petitioner places reliance on CCE vs. Triveni sheet glass works (2005) 5 RC 612(SC) for the proposition that in the event all the facts are disclosed to the department and brought to the knowledge of the department the extended period is not ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Without prejudice it is settled position of law that even in case where suppression is proved, the recourse to reasonable cause under section 80 is not prohibited. The authorities below failed to appreciate that issuing the show cause notice in respect of the service tax payments along with interest made by the petitioner before issue of show cause notice is not maintainable on the facts and circumstances of the case. a. The Petitioner has paid service tax and interest amount much before issue of show cause notice for the service rendered by the Petitioner and the details of payments are also intimated to the department. b. As per legislative provisions, show cause notice can be issued ONLY & ONLY wherever the taxes have not been levied or not been paid or has been short levied or short paid or erroneously refunded. In the instant case of the Petitioner: (i) The service tax has been paid much before the date of issue of notice; (ii) The amount paid is intimated to the department. And consequently the essential ingredients for issue of notice do not exist on the facts of the case. c. As per Section 73(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er when the Petitioner got registered with the service tax department for the services under the classification of Practicing Chartered Accountant services. Consequently, the Petitioner has not suppressed the facts. d) In support of this submission the Petitioner places reliance on the decisions of the Hon'ble Supreme Court in the case of Kushal Fertilisers (P) Ltd Vs. Commissioner of Cus & C.Ex., Meerut 2009 (238) E.L.T. 21 (SC). e) The authorities below erred in imposing the penalty under section 78 of the Finance Act, 1994 and failed to consider that there is a reasonable cause for waiver of penalty as per provisions of section 80 of the Act. Consequently, the Petitioner is not liable for penalty under section 78 of the Finance Act, 1994. f) The Petitioner places reliance on the decision of this Hon'ble Court in the case of Commissioner of Service tax Vs. Motor world & Ors (2012) 79 DTR (Kar) 151. g) The Petitioner places reliance on the decision of the Hon'ble Supreme Court in the case of Hindustan Steel Limited Vs. State of Orissa (1972) 83 ITR 26 (SC). The Hon'ble Court observed that "even if a minimum penalty is prescribed, the authority competent t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 75 is paid within thirty days from the date of communication of order of the Central Excise Officer determining such service tax, the amount of penalty liable to be paid by such person under this section shall be twenty five percent, of the service tax so determined. ii) In the present case the entire service tax and interest as determined under section 73(2) of the Act in the Order- In-Original is paid much before issue of show cause notice itself and consequently the above first proviso to section 78 of the Act is applicable on the facts and circumstances of the case. iii) The learned Additional Commissioner has not intimated the availability of the said benefit to the Petitioner in the order-in-Original passed vide dated 30.10.2009. The Petitioner respectfully states that it can produce any number of order-in-original wherein the adjudicating authority specifically mentioned about this in the order- in-original. Consequently, the present order-in-original passed is bad in law. iv) As per the second proviso to section 78 of the Act the benefit of the reduced penalty under the first proviso shall be available only if the amount of penalty so determined has also been paid wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 SCC 612. 2. District Board, Muzaffarnagar v. The upper India Sugar Mills Limited, Khatauli, AIR 1957 AII 527. 3. Commissioner of C. Ex., Mangalore v. Shree Krishna Pipe Industries, (2004) 165 ELT 508." 17. The contentions urged on behalf of the petitioner was emphatically denied by the respondent and contended that the factual aspects cannot be gone into by this Court, that too, in the review jurisdiction and sought for dismissal of the Review Petition. 18. The Department maintained their stand that the Order came to be passed by the Additional Commissioner of Service Taxes on appreciating the material facts in a proper manner and the letter issued by the KSFC clearly mentions that service charges were paid by KSFC to the petitioner firm in time and therefore, there is willful evasion of payment of service tax in time, resulting in the Department initiating action as is contemplated under the provisions of the Act and levied penalty in accordance with law. Therefore, sought for rejection of review petition. 19. After hearing the parties, this Court granted time for the Department to place on record the correspondence made by the KSFC whereby, service charges payable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. The Respondent submits that the affidavit filed by the petitioner is legally and factually untenable. The Final Order No.22268/2017 dated 25/09/2017 passed by the CESTAT and the Order-In-Appeal No.168/2012 and the Order-In-Original No.141/2009 have clearly brought out the circumstances for levy of penalty and confirmed by this Hon'ble Court in CEA No.21/2018. Neither there is a factual error nor has legal infirmity in passing the orders been demonstrated by the petitioner to entertain the present Review Petition. 2. The Respondent submit that the penalty was imposed under the provisions of Section 78 of the Finance Act, 1994 as existing in the statute at the relevant point of time. The Petitioner after having collected the service tax from his clients neither discharged nor declared the same to the Department by filing ST-3 Returns before initiation of proceedings by the Respondent/Revenue. The undisputed facts clearly demonstrate that the petitioner has deliberately suppressed the fact of collection of service tax from the Department and the service tax evasion has come to the notice of the Department only after detailed investigation was conducted. If the Department had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 994. Therefore, the petitioner agreeing to pay penalty under amended provision of Section 76 of the Finance Act, 1994 cannot be legally acceptable. 6. The petitioner being a practicing Chartered Accountant has not demonstrated valid and cogent reason in his support during the proceedings before the Adjudicating Authority and Appellate Authorities. The CESTAT has observed that the petitioner has not contested the findings of the lower authorities and even before this Hon'ble Court during the pendency of the CEA No.21/2018. Therefore, there is no scope to raise new factual and legal contentions in the Review Petition. The conduct of the petitioner has to be viewed seriously particularly taking into consideration that he is a practicing Chartered Accountant and is completely aware of his tax obligations compared to a layman. The acceptance of the plea of the petitioner would amount to allowing the Review Petition as the petitioner is indirectly seeking for quashing of Penalty order passed under Section 78 of the Finance Act and confirmed by this Hon'ble Court which is not permissible under the provisions of the Finance Act, 1994. WHEREFORE, the Respondent prays that this H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s against the review petitioner. It is pertinent to note that KSFC has now not been able to furnish copy of the said letter. 28. The scope of Review Petition is no longer res integra. The Hon'ble Apex Court, in the case of the S. Madhusudhan Reddy Vs. V. Narayana Reddy and Others reported in 2022 SCC Online SC 1034, after taking into consideration catena of judgments of the Apex Court on the point, has held as under: "31. As can be seen from the above exposition of law, it has been consistently held by this Court in several judicial pronouncements that the Court's jurisdiction of review, is not the same as that of an appeal. A judgment can be open to review if there is a mistake or an error apparent on the face of the record, but an error that has to be detected by a process of reasoning, cannot be described as an error apparent on the face of the record for the Court to exercise its powers of review under Order XLVII Rule 1 CPC. In the guise of exercising powers of review, the Court can correct a mistake but not substitute the view taken earlier merely because there is a possibility of taking two views in a matter. A judgment may also be open to review when any ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to establish that all payments have been made by the KSFC for 45 persons who had been deputed for carrying out the internal audit work. According the Review Petitioner, he came to know about the fact that no such letter has been addressed by KSFC only recently and said letter is the basis on which the entire proceedings against Review Petitioner has been commenced and therefore, he can maintain the Review Petition. 32. In the light of the above factual aspects, this Court bestowed its attention to Section 78 of the Finance Act, whereunder, penalty proceedings has been commenced and review petitioner has been penalized to pay Rs.10,12,433/-. For ready reference, Section 78 of the Finance Act is culled out hereunder: "Penalty for failure to pay service tax for reasons of fraud, etc. 78. (1) Where any service tax has not been levied or paid, or has been shortlevied or short-paid, or erroneously refunded, by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of this Chapter or of the rules made thereunder with the intent to evade payment of service tax, the person who has been served notice under the proviso to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt as determined under sub- section (2) of section 73, the time within which the interest and the reduced penalty is payable under clause (ii) of the second proviso to sub-section (1) in relation to such increased amount of service tax shall be counted from the date of the order of the Commissioner (Appeals), the Appellate Tribunal or the court, as the case may be.] 33. On careful perusal of the above provisions, it is crystal clear that as per second proviso, if the tax is paid within a period of 30 days, the penalty payable would be within a period of 30 days of the date of service of the notice under proviso to sub Section (1) of Section 73, the penalty payable shall be 15% of such service tax and proceedings in respect of such service tax, interest and penalty shall be deemed to be concluded. 34. In the case on hand, notice under Section 73(1) of the Act came to be issued by the authorities, the first show cause notice issued by the authorities is on 08.08.2007. Again, the second show cause notice was issued on 18.09.2008. 35. As per the first proviso to Section 73, the penalty payable was 50% and as per second proviso, penalty payable is 15%. As per second proviso (ii), th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner clearly mentions that he is intending to put quietus by paying 25% of the penalty. 40. In the absence of the parties placing the letter said to have been issued by KSFC which is the sole basis for passing the order imposing 100% penalty on the review petitioner, the order passed by the respective authorities which came to be confirmed in CEA No.21/2018 needs a relook. 41. Taking note of these peculiar facts and circumstances of the case, this Court is of the considered opinion that instead of directing the parties to one more round of litigation by allowing the review petition and setting aside the order passed in CEA No.21/ 2018 and remitting the matter for fresh consideration in accordance with law, if the matter is put to rest by accepting the affidavit filed by the review petitioner and directing the review petitioner to pay Rs.2,50,000/- would meet the ends of justice. Furthermore, at this distance of time, it would be a futile exercise for both the parties to re-agitate the issues from square one. 42. In view of the foregoing discussion, this Court is of the considered opinion that a case is made out by the Review Petitioner RP No.384/2022 to pay a sum of Rs.2,50,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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