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TMI Blog2024 (10) TMI 1465X X X X Extracts X X X X X X X X Extracts X X X X ..... ce tax. There is no record to show that failure to pay service tax was wilful and deliberate as held in Pushpam Pharmaceuticals Co. [ 1995 (3) TMI 100 - SUPREME COURT] Hon'ble Supreme Court in Uniworth Textiles Ltd.,[ 2013 (1) TMI 616 - SUPREME COURT] has held that if non-disclosure of certain items assessable to will not invite the wrath of the proviso for the non-payment of duty on disclosed items, after inquiry from the department concerned and does not attract the proviso. Thus, we are inclined to hold no penalty is payable by the appellant under any of the provisions of the Act. Since tax payable has been accepted by the appellant, appellant shall also pay interest on belated payment of tax under Section 75 of the Finance Act, 1994. We therefore, partly allow the appeal and answer the substantial questions of law partly in favour of the appellant by holding no penalty is imposable on the appellant. The appellant shall pay interest under Section 75 of the Finance Act, 1994 within a period of thirty days from the date of receipt of a copy of this order, if same has not been already paid. - Honourable Mr. Justice R. Suresh Kumar And Honourable Mr. Justice C. Saravanan For t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 5. The appellant appears to have entertained bonafide view that the appellant was not liable to pay service tax on the amounts collected towards (a) cheque return charges, (b) minimum balance charges and (c) charges collected towards non-maintenance of Quarterly Average Balance. 6. These amounts were levied and collected by the appellant in accordance with Reserve Bank of India in its circular No DBOD.Dir.BC53/13.10.00/2002-03 dated 26.12.2002 and RBI Notice No.RBI/2004/98 bearing Reference DBS.CO.FGV(F)No.1306/23.08.001/2003-04 dated 15.03.2004. 7. The dispute pertains for the period between 10.09.2004 and 31.07.2007 long before clarification of the RBI dated 20.11.2014 bearing Reference DBR.Dir.BC.No.47/13.03.00/2014-15. The appellant entertained a view that the appellant was indeed not liable to pay service tax on the above three amounts collected as penal charges from its customers pursuant to the above directions of the RBI. Therefore, the appellant had requested the Chartered Accountant to clarify the position vide the following letters:- S.No. dated 1 10.08.2005 2 11.08.2005 8. The Chartered Accountant inturn appears to have forwarded a letter intimating to the Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its reply dated 29.04.2008 which culminated the Order in Original No.2/2008 (ST) dated 19.06.2008 whereby the following amounts were confirmed :- (1) I confirm the demand of Rs. 1,55,88,472/- (Rupees one crore fifty five lakhs eighty eight thousand four hundred and seventy two only) as Service Tax and Rs. 3,11,769/-(Rupees three lakh eleven thousand seven hundred and sixty nine only) as educational cess payable on Cheque Return charges, Minimum Balance violation charges and Non maintenance of QAB collected from the customers for the period from 10.9.2004 to 31.3.2007 under the proviso to Section 73(1) of Finance Act, 1994 read with Rule 6 of Service Tax Rules, 1994; (ii) I order that interest at the appropriate rate on the amount confirmed vide Sl. No. (i) above is liable to be recovered from the noticee under Section 75 of the Finance Act, 1994; (iii) I impose a penalty of Rs. 200/- per day on the noticee in respect of the 1 service tax payable during the period from 01.07.2003 to 17.04.2006, under the provisions of section 76 of Finance Act 1994, - (iv) I impose a penalty of 2% per month (being the higher amount of penalty) in respect of the service tax payable during the period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and data processing: (b)foreign exchange broking provided by a foreign exchange broker other than those covered under sub-clause (a); 12) banking and other financial services means (a)the following services provided by a banking company or a financial institution including a nonbanking financial company or any other body corporate or [commercial concern], namely : (i) financial leasing services including equipment leasing and hire purchase; [ Explanation. For the purposes of this item, financial leasing means a lease transaction where (i) contract for lease is entered into between two parties for leasing of a specific asset; (ii) such contract is for use and occupation of the asset by the lessee; (iii) the lease payment is calculated so as to cover the full cost of the asset together with the interest charges; and (iv) the lessee is entitled to own, or has the option to own, the asset at the end of the lease period after making the lease payment;] [(ii)Omitted] (iii) merchant banking services; (iv) Securities and foreign exchange (forex) broking, and purchase or sale of foreign currency, including money changing;] (v) asset management including portfolio management, all forms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the penal charges levied was to be in proportion to the shortfall observed, although the said guidelines issued long after the period and dispute. It is not in dispute that the appellant has now paid the tax and accepted the liability. 22. To answer the substantial questions of law, it may be useful to refer few dates of the replies to the show cause notices as mentioned below :- S.No. Show cause notice dated Reply dated Order in Original No. Date 1 09.04.2008 29.04.2008 No.2/2008 (ST) dated 19.06.2008 23. In this case, as mentioned above the Show Cause Notice bearing Reference C.No.V/ST/15/6/2008-Cx.Adj was issued on 09.04.2008 for the period from 10.09.2004 to 31.03.2007. The said show cause notice preceded a notice dated 29.06.2007. 24. As per Section 73 (3) of the Finance Act, 1994 an Assessee can pay the amount of service tax on the basis of his or her or its own ascertainment or on the basis of tax ascertained by a Central Excise Officer before the service of notice under Sub section (1) of Section 73 in respect of such service tax and inform the Central Excise Officer in which case no notice under sub-section (1) shall be served on receipt of such information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . There is no dispute on the same. However, it is not clear whether the appellant has paid interest for the period in dispute under Section 75 of the Finance Act, 1994. There are also no records to substantiate that the appellant had paid the interest under Section 75 of the Finance Act, 1994. 30. The petitioner has paid the Service Tax on 03.07.2008 i.e. within 115 days from the date of receipt of Show Cause Notice bearing C.No.V/ST/15/6/2008-Cx.Adj dated 09.04.2008. 31. Benefit of Sub-section (1A) to Section 73 cannot be extended by relaxing the period beyond 30 days as it is impermissible. However, there were several clarifications of the Central Board of Excise and Customs that were floating around. In so far as charging of penal amounts on the customers is concerned, Circular No.96/7/2007-ST dated 23.08.2007 was issued by the Central Board of Excise and Customs. There it was clarified that non retention charges being penal rent for retaining the containers beyond pre-determined period is not chargeable to Service Tax. 32. Similarly, Circular No.121/2/2010-S.T dated 26.04.2010, it was clarified that surcharge collected on the delayed payment of telephone bills was not a conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e main body of the section, in fact, contemplates ordinary default in payment of duties and leaves cases of collusion or wilful misstatement or suppression of facts, a smaller, specific and more serious niche, to the proviso. Therefore, something more must be shown to construe the acts of the appellant as fit for the applicability of the proviso. 13. This Court in Pushpam Pharmaceuticals Co. v. CCE [1995 Supp (3) SCC 462 : (1995) 78 ELT 401] while interpreting the proviso of an analogous provision in Section 11-A of the Central Excise Act, 1944, which is pari materia to the proviso to Section 28 discussed above, made the following observations: (SCC pp. 463-64, para 4) 4. Section 11-A empowers the Department to reopen proceedings if the levy has been short-levied or not levied within six months from the relevant date. But the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. The meaning of the word both in law and even otherwise is well known. In normal understanding it is not different that what is explained in various diction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is qualified by the preceding word wilful . Therefore, it is not correct to say that there can be suppression or misstatement of fact, which is not wilful and yet constitutes a permissible ground for invoking the proviso to Section 11-A. 25.In Pushpam Pharmaceuticals Co.v.CCE[1995 Supp (3) SCC 462 : (1995) 78 ELT 401] this Court has held that the extended period of five years under the proviso to Section 11-A(1) is not applicable just for any omission on the part of the assessee, unless it is a deliberate attempt to escape from payment of duty. Where facts are known to both the parties, the omission by one to do what he might have done and not that he must have done does not constitute suppression of fact. 15. In Anand Nishikawa Co. Ltd. v. CCE [(2005) 7 SCC 749], while again referring to the observations made in Pushpam Pharmaceuticals Co . [1995 Supp (3) SCC 462 : (1995) 78 ELT 401], this Court clarified the requirements of the proviso to Section 11-A as follows: ( Anand Nishikawa Co. Ltd. case [(2005) 7 SCC 749], SCC p. 759, paras 26-27) 26. This Court in Pushpam Pharmaceuticals Co. v. CCE [1995 Supp (3) SCC 462 : (1995) 78 ELT 401] while dealing with the meaning of the expres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of fraud, collusion, misconduct or suppression to attract the proviso to Section 11-A(1) of the Act. There is considerable force in this contention. Therefore, if non-disclosure of certain items assessable to duty does not invite the wrath of the proviso, we fail to understand how the nonpayment of duty on disclosed items, after inquiry from the department concerned meets with that fate. 36. In view of the above, we are inclined to hold no penalty is payable by the appellant under any of the provisions of the Act. Since tax payable has been accepted by the appellant, appellant shall also pay interest on belated payment of tax under Section 75 of the Finance Act, 1994. 37. We therefore, partly allow the appeal and answer the substantial questions of law partly in favour of the appellant by holding no penalty is imposable on the appellant. The appellant shall pay interest under Section 75 of the Finance Act, 1994 within a period of thirty days from the date of receipt of a copy of this order, if same has not been already paid. 38. This Civil Miscellaneous Appeal is partly allowed with the above observations. No costs. Consequently, connected miscellaneous petition is closed. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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