TaxTMI 
TaxTMI 
2017 (4) TMI 1180
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.... 2.1) The petitioner herein, M/s. Mahadev Logistics, is a partnership firm which is engaged in activities of supply of vehicles like Hyva, Dumpers, Pay Loader, Tipper etc. on hire basis and also in goods transportation by road but without service tax registration. These activities are classified under supply of taxable goods service and goods transport services under subclause (zzzzj) of clause 105 and clause 50(f) of Section 65 of the Finance Act, 1994. Investigation was initiated against the petitioner on the basis of intelligence report that the petitioner is engaged in supply of tangible goods on hire basis without obtaining service tax registration and accordingly, summons were issued on 30-5-2014 requiring the petitioner to submit the details / documents related to its activities. Immediately thereafter, on 13-6-2014, the petitioner obtained service tax registration and submitted documents before the concerned competent authority. On 25-7-2014, on its own, the petitioner deposited service tax accepting its liability to the extent of Rs. 91,61,846/- and intimated to the Department. Similarly, on 26-8- 2014, the petitioner also admitted and deposited interest liability to the ....
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.... petitioner and copy of the application was forwarded to the Commissioner, Customs and Central Excise for report under Section 32F (3) of the Act of 1944. The Additional Commissioner, Central Excise, Customs and Service Tax, by its memorandum dated 8-1-2015 submitted revenue report stating that the application had already paid service tax liability against supply of tangible goods service accepting their liability after initiation of investigation by the Department and also paid interest on the said amount, but the petitioner is liable for penalty, as the petitioner has willfully suppressed the fact of providing taxable service of supply of tangible goods with mala fide intent to evade payment of service tax. 2.4) The said Commission by its impugned order held that the petitioner has already paid service tax liability of Rs. 91,61,846/- and also paid interest, therefore, nothing is required to be done on that count and also granted full immunity from prosecution, as the petitioner has cooperated in the proceedings before the Commission and made full and true discloser of its duty liability. However, the Commission imposed a penalty of Rs. 4,50,000/- upon the petitioner obs....
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....e, the Settlement Commission is absolutely justified in imposing penalty in exercise of power conferred under Section 78 of the Finance Act, 1994 and as such, the writ petition deserves to be dismissed. 6. Mr. Neelabh Dubey, learned counsel for respondent No.3, would submit that service tax liability has been paid subsequently by respondent No.3 to the petitioner and before that, the service tax liability has been discharged by the petitioner. He would further submit that there is no mala fide on the part of the petitioner in not discharging the service tax liability. 7. I have heard learned counsel for the parties and also considered the rival submissions made herein-above and gone through the record carefully and critically. 8. In order to judge the correctness of the plea raised at the Bar, it would appropriate to notice Section 78 of the Finance Act, 1994 which provides penalty for suppressing, etc., of value of taxable services. Section 78 of the Finance Act, 1994 states as under: - "78. Penalty for suppressing, etc., of value of taxable services.-(1) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refun....
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....e thereon and twenty-five per cent. of the consequential increase of penalty have also been paid within thirty days or ninety days, as the case may be, of communication of the order by which such increase in service tax takes effect: Provided further that if the penalty is payable under this section, the provisions of section 76 shall not apply. Explanation.-For the removal of doubts, it is hereby declared that any amount paid to the credit of the Central Government prior to the date of communication of the order referred to in the second proviso to sub-section (1) or the first proviso to subsection (2) shall be adjusted against the total amount due from such person." 9. A focused study of Section 78 (1) of the Finance Act, 1994 would show that where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by reason of fraud; or collusion; or willful misstatement; or suppression of facts; or contravention of any of the provisions of Chapter V of the Finance Act, 1994 or of the rules made thereunder with the intent to evade payment of service tax, the person, liable to pay such service tax or erroneous refund, a....
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....nalty or interest so modified. Explanation.-For the removal of doubts, it is hereby declared that in a case where a notice has been served under sub-section (4) of section 11A and subsequent to issue of such notice, the Central Excise Officer is of the opinion that the transactions in respect of which notice was issued have been recorded in specified records and the case falls under sub-section (5), penalty equal to fifty per cent. of the duty shall be leviable. (2) Where the amount as modified by the appellate authority or tribunal or court is more than the amount determined under sub-section (10) of section 11A by the Central Excise Officer, the time within which the interest or penalty is payable under this Act shall be counted from the date of the order of the appellate authority or tribunal or court in respect of such increased amount." 11. In the matter of Maya Devi v. Raj Kumari Batra (2010) 9 SCC 486, the Supreme Court has held that where an authority is vested with discretionary powers, discretion has to be exercised by application of mind and by recording reasons to promote fairness, transparency and equity. 12. It is settled law that an order impo....
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.... the assessee, the imposition of penalty under Section 11AC of the Act of 1944 is wholly impermissible, and observed in paragraphs 19, 20 and 21 as under: "19. From a perusal of the aforesaid section, especially the underlined portion, it is clear that in order to attract the penalty provision under Section 11AC, criminal intent or `mens rea' is a necessary constituent. In the reply to the show cause notice the stand which has been taken by the respondent is that it has been paying the duty and there is no mala fide intention on its part to evade the payment of duty. The further stand is that the goods were cleared from the factory only on payment of duty. This stand which has been taken in the reply to the show cause notices was not found to be incorrect in the order-inoriginal. As such the imposition of penalty of the equal amount of duty under the order-in-original cannot be sustained. 20. It is well settled that when the statutes create an offence and an ingredient of the offence is a deliberate attempt to evade duty either by fraud or misrepresentation, the statute requires `mens rea' as a necessary constituent of such an offence. But when factually n....
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....e that the petitioner did not produce the service tax registration certificate to respondent No.3, however, immediately after initiation of investigation and upon service of notice of investigation by respondents No.1 and 2, the petitioner had already discharged its tax liability before issuance of show cause notice and paid the service tax liability on 25-7-2014 and discharged interest liability on 26-8-2014. It is also not in dispute that the petitioner discharged the tax liability even before receiving the said service tax amount from the service recipient - respondent No.3 herein and further, the learned Settlement Commission has already accepted the service tax liability and the interest liability holding that the petitioner has made full and true disclosure of its duty liability. It is also an admitted fact that the service tax was recoverable from respondent No.3 and the petitioner would get nothing from evasion of tax, as it has not to be paid by the petitioner from its own funds, it was recovered from respondent No.3 on production of service tax registration certificate and evidence of it and it could have been reimbursed by respondent No.3. Therefore, there is no reason f....