TaxTMI 
TaxTMI 
2015 (12) TMI 443
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....he date of the order of the CESTAT? 4. This Court has heard the submissions of Ms Sonia Sharma, learned counsel for the Appellant and Ms Kavita Jha, learned counsel for the Respondent. 5. The facts leading to the filing of the present appeal are that the Respondent, Tops Security Limited, is engaged in the business of providing security services. An investigation carried out by the Directorate General of Central Excise Intelligence revealed that the Respondent was charging and collecting service tax from its clients but the service tax that was paid was not commensurate with the amount received for the services rendered. Accordingly, a Show Cause Notice (SCN) dated 20th October, 2009 was issued to the Respondent by the Commissioner of Service Tax demanding service tax amounting to Rs. 8,15,44,386/- for the period 2004-05 to 2008-09 by invoking the extended period and proposing penalty under Section 78 of the Finance Act, 1994. Subsequently, SCN dated 10th April, 2011 demanding differential service tax of Rs. 89,76,597/- for the period 2009-10 and another SCN dated 20th October, 2011 demanding differential service tax of Rs. 81,07,919/- to the period 2010-11 were also issued. ....
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.... to the Respondent the benefit of payment of 25% of the penalty within 30 days of the order of the CESTAT, which was obviously far beyond the period of 30 days as envisaged in terms of the 3rd proviso to Section 78 (1) of the Finance Act 1994 (as it stood prior to its substitution by the Finance Act, 2015)? 9. When this appeal was first listed for hearing on 11th September 2015, the Court was informed by the learned counsel for the Appellant that the Respondent had not even complied with the above order dated 18th November, 2014 of the CESTAT. In other words, the reduced penalty was not paid within 30 days of the passing of the order of the CESTAT. Indeed, this has not been disputed before this Court by the learned counsel for the Respondent as well. She informed the Court that upon failure of the Respondent to avail of the benefit granted to it by the CESTAT by the impugned order, the Department has initiated steps for recovery of the service tax, interest and penalty by inter alia freezing the accounts of the Respondent. She urged that in view of this development, the question urged by the Department in the present appeal has been rendered academic and should be left open for ....
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....eunder with the intent to evade payment of service tax, the person, liable to pay such service tax or erroneous refunds, as determined under sub-section (2) of section 73, shall also be liable to pay a penalty, in addition to such service tax and interest thereon, if any, payable by him, which shall be equal to the amount of service tax so not levied or paid or shortlevied or short-paid or erroneously refunded. Provided that where true and complete details of the transactions are available in the specified records, penalty shall be reduced to fifty per cent of the service tax so not levied or paid or short-levied or short-paid or erroneously refunded. Provided further that where such service tax and the interest payable thereon 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 the first proviso shall be twentyfive per cent of such service tax; Provided also that the benefit of reduced penalty under the second proviso shall be available only if the amount of penalty so determined has also been paid within the pe....
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....f Section 78 read with Section 83 thereof. In K. P. Pouches (P) Ltd. v. Union of India 2008 (228) ELT 31 (Del HC), the facts were that when certain consignments of excisable goods were intercepted by the officers of the Central Excise Department, the Assessee admitted that his employee had committed a mistake in clearing them without payment of duty. On the same day when the goods were intercepted, the Assessee himself debited from the Provisional Ledger Account (PLA) Register the sum of Rs. 2,73,488 constituting the duty in respect of the said goods. The SCN issued to the Assessee mentioned in para 8 about the said debit entry and the fact that it had been made "voluntarily and admittedly" by the Assessee. In the adjudication order, while confirming the duty, a penalty equivalent to 100% of the duty was levied under Section 11AC of the CE Act. After losing the appeal before the CESTAT, the Assessee contended before this Court that in view of the first proviso to Section 11AC of the CE Act as it then stood, penalty in excess of 25% of the duty could not have been levied "since the entire duty was paid by the Assessee on the date of search and seizure" i.e. well before the date o....
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....d that "only where penalty was enhanced at the appellate stage that in case of the 25% of the differential amount the penalty can be paid within 30 days of the order and not otherwise." 17. The same issue arose again in this Court in Sri Sai Enterprises v. Commissioner of Central Excise (2013) 288 ELT 40 (Del). This was a case where the Assessee failed to make payment of the service tax and interest but nevertheless sought to avail of the benefit of the reduced penalty in terms of the proviso to Section 11AC of the CE Act. This time, the Court distinguished its earlier decision in K. P. Pouches (P) Ltd. (supra) and held that it was clear from the conduct of the Assessee that "he never wanted or showed any inclination to pay the duty amount or the interest and was throughout contesting the order in original on merits. In case the Appellant Assessee had any grievance with regard to non-compliance of Section 11AC, the said grievance should have been raised at the earliest opportunity. The Appellant should have deposited the duty amount." Effectively, therefore, the decision in K. P. Pouches (P) Ltd. (supra) has been limited to a situation where the entire excise duty leviable has b....
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..... 2013 (289) ELT 95 (All) and held that the interpretation of Section 11 AC of the CE Act in its true spirit contemplates payment of the reduced penalty within 30 days of the communication of the order of the adjudicating authority. It also noted that "this being the provision embedded in the statute itself, nobody can be permitted to plead ignorance of the law." However, it was observed that "we need not be oblivious of stark reality" and that "it would not be too much to expect the Revenue to spell out the fulfilment of such requirements in the order itself." On the facts of the case in Rajeshree Dyeing & Printing Mills (P) Ltd. (supra), the Gujarat High Court noted that despite the adjudication order spelling out the availability of the option of payment of reduced penalty, the Assessee had not made such payment within the stipulated time. Therefore, it was held that the CESTAT could not have made available the option of payment of reduced penalty at the appellate stage. 21. To round up the discussion of the case law on Section 11AC of the CE Act, the predominant judicial view as evidenced by the decisions of the High Courts of Bombay, Allahabad and this Court is that, notwit....
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....cating authority, will make a reference to the statutory provisions. In particular if the submission relates to penalty it is unlikely that an Assessee will not even refer to the relevant statutory provisions. The question of an Assessee, therefore, pleading ignorance of the law governing the adjudication proceedings cannot arise. There is no statutory requirement that the adjudication order itself should remind the Assessee of the option available of paying a reduced penalty in terms of the second and third proviso to Section 78 (1) of the Finance Act 1994. 25. When it comes to filing a further appeal, it is not unusual to find the covering letter accompanying the order of adjudication mentioning the statutory provision and the time period within which an Assessee may, if it so chooses, file an appeal. However, even if the covering letter failed to mention it, an Assessee would not be able to plead ignorance of such provision and seek extension of the period of limitation on that score. Even for the purposes of an appeal, the date on which an order is 'communicated' to the party who seeks to file the appeal is the crucial date. That period cannot get extended only becau....