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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 ..... d for being answered :- "(1) Whether in the facts and circumstances of the case, the Hon'ble Tribunal has erred in upholding invocation of extended period of limitation in terms of proviso to Section 73 of the Finance Act, 1994 when none of the ingredients stipulated therein have been satisfied? (2) Whether the Hon'ble Tribunal was right in confirming suppression for mere non-declaration of details which are not required under law to be disclosed? (3) Whether the Hon'ble Tribunal was right in holding that there is non-disclosure of the disputed receipts in their returns required to be filed under law, at least under protest, when there is no provision under law for such disclosure? (4) Whether in facts and circumstances whether the Hon'ble Tribunal was right in upholding imposition of penalties even in a case where there is no positive finding of suppression? (5) Whether in the facts and the circumstances of the case, the Hon'ble Tribunal has erred in upholding simultaneous imposition of penalties under Sections 76, 77 and 78 of the Finance Act, 1994? (6) Whether in the facts and circumstances of the case, the Hon'ble Tribunal has erred in not ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2007 and called upon the appellant to pay service tax on several issues. In reply dated 30.07.2007 bearing reference PDD/ST/4033/2007-08, the petitioner replied the collection of penal charges were not by way of services and therefore may not attract service tax and no tax was payable on the said amount. 12. A reference was alluded to the Interactive Seminar held by the Office of the respondent on 12.08.2005 wherein the Chartered Accountant of the appellant had ostensibly raised the issue and was informed that no service tax and surcharge was payable by the appellant. 13. However, there are no records to show either the appellant's Chartered Accountant had participated in the Interactive Seminar held by 12.08.2005 or that a decision was conveyed to the effect that no service tax was payable on the penal charges. 14. After the appellant had replied on 30.07.2017, the respondent issued a Show Cause Notice dated 09.04.2008 bearing reference C.No.V/ST/15/6/2008-Cx.Adj under the proviso to Section 73(1) of the Finance Act, 1994 and proposed to levy interest under Section 75 and penalty under Sections 76 and 78 of the Finance Act, 1994/on the ground that the appellant wilfully fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent and that the Chartered Accountant concerned of the appellant had indeed participated in the Interactive Seminar held on 12.08.2005. 17. Point for consideration is whether the appellant can be fastened with a liability to pay service tax and penalty? 18. The service tax of banking and financial service was altered with effect from Finance (No.2) Act, 2004 dated 10.09.2004 by Substituting the definition of "banking and other financial services". Prior to the aforesaid period, the definition read differently. The definition as it stood prior to 10.09.2004 and with effect from 10.09.2004 are as under : - Section 65(12) prior to substitution(as it stood prior to 10.09.2004) Section 65(12) after substitution(as it stood after 10.09.2004) 12)"banking and other financial service" means- (a) the following services provided by a banking company or a financial institution including a nonbanking financial company or any other body corporate, namely:- (i) financial leasing services including equipment leasing and hirepurchase by a body corporate; (ii) credit card services; (iii) merchant banking services; (iv)securities and foreign exchange (forex) broking: (v) as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k accounts;] (b)foreign exchange broking provided by a foreign exchange broker other than those covered under sub-clause (a); 19. The expression "taxable service" was defined in Section 65(105)(zm), the definition of taxable service and after in Section 65(105)(zm) read as under :- Section 65(105) prior to substitution(as it stood prior to 10.09.2004) Section 65(105) after substitution(as it stood after 10.09.2004) (zm) to a customer, by a banking company or a financial institution including a nonbanking financial company, in relation to banking and other financial services. (zm)to a customer, by a banking company or a financial institution including a nonbanking financial company, or any other body corporate or commercial concern, in relation to banking and other financial services 20. Thus, service tax came to be levied a banking company or financial institutions including non banking financial company or any other body corporate or commercial concern in relation to banking and other financial services as defined in Section 65(12) as amended with effect from 10.09.2004. It also included few other activities within its scope These penal charges have been purportedly collec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of Chapter-V or the rules made thereunder, with intent to evade payment of service tax, by such person or his agent, to whom a notice is served under the proviso to subsection (1) by the Central Excise Officer, such person or agent as the case may be pay service shall also tax in full or in part as may be accepted together and the interest payable thereon under Section 75 and penalty equal to twenty-five percent of the service tax specified in the notice or the service tax so accepted by such person within thirty days of the receipt of the notice. This option was also not exercised by the appellant. 27. Thus, prior to issuance of the Show Cause Notice No.C.No.V/ST/15/6/2008-Cx.Adj dated 09.04.2008, the appellant could have paid the entire amount of service tax together with interest under Section 75 either on its own ascertainment or on the ascertainment of the department, in which case no penalty was to be levied provided ingredients under provision to sub-section(1) to Section 73 of the Finance Act, 1994 were not attracted. 28. After issuance of Show Cause Notice No.C.No.V/ST/15/6/2008-Cx.Adj dated 09.04.2008 under proviso to Sub-section (1) to Section 73 of the Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The clarification issued by the Board is binding on the department. It is not binding on the Courts as per the decision of the Hon'ble Supreme Court in Commissioner of Central Excise v. Ratan Melting & Wire Industries, (2008) 13 SCC 1. 34. We are of the view that the appellant was entitled to take a bonafide stand that no service tax was payable in the context of collection of penal charges although it could be concluded that it was liable to pay service tax. There is no record to show that failure to pay service tax was wilful and deliberate as held in Pharmaceuticals Co. v. CCE [1995 Supp (3) SCC 462. 35. The Hon'ble Supreme Court in Uniworth Textiles Ltd., vs. Commissioner of Central Excise, Raipur, (2013) 9 SCC 753, 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. Relevant portion of the decision reads as under :- 12.We have heard both sides, Mr R.P. Bhatt, learned Senior Counsel, appearing on behalf of the appellant, and Mr Mukul Gupta, learned Senior Counsel appearing on behalf of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppression." (emphasis supplied) 14. In Sarabhai M. Chemicals v. CCE [(2005) 2 SCC 168] a three-Judge Bench of this Court, while referring to the observations extracted above, echoed the following views: (SCC p. 181, paras 23-25) "23. Now coming to the question of limitation, at the outset, we wish to clarify that there are two concepts which are required to be kept in mind for the purposes of deciding this case. Reopening of approvals/assessments is different from raising of demand in relation to the extended period of limitation. Under Section 11-A(1) of the Central Excise Act, 1944, a proper officer can reopen the approvals/assessments in cases of escapement of duty on account of non-levy, non-payment, short-levy, short-payment or erroneous refund, subject to it being done within one year from the relevant date. On the other hand, the demand for duty in relation to extended period is mentioned in the proviso to Section 11-A(1). Under that proviso, in cases where excise duty has not been levied or paid or has been short-levied or short-paid or erroneously refunded on account of fraud, collusion or wilful misstatement or suppression of facts, or in contravention of any provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CCE[1995 Supp (3) SCC 462 : (1995) 78 ELT 401] we find that 'suppression of facts' can have only one meaning that the correct information was not disclosed deliberately to evade payment of duty. When facts were known to both the parties, the omission by one to do what he might have done and not that he must have done, would not render it suppression. It is settled law that mere failure to declare does not amount to wilful suppression. There must be some positive act from the side of the assessee to find wilful suppression. Therefore, in view of our findings made hereinabove that there was no deliberate intention on the part of the appellant not to disclose the correct information or to evade payment of duty, it was not open to the Central Excise Officer to proceed to recover duties in the manner indicated in the proviso to Section 11-A of the Act." (emphasis in original) 16. In CCE v.H.M.M. Ltd. [1995 Supp (3) SCC 322] this Court held that mere non-disclosure of certain items assessable to duty does not tantamount to the mala fides elucidated in the proviso to Section 11-A(1) of the Central Excise Act, 1944. It enunciated the principle in the following way: (SCC pp. 323-24, para ..... X X X X Extracts X X X X X X X X Extracts X X X X
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