TaxTMI 
TaxTMI 
2018 (10) TMI 268
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....ise Intelligence it was found that Appellants were charging service tax from their customers, and the amounts received by them were inclusive of service tax. The payment was received at the branch level which was deposited in their centralized account in Corporation Bank. The amount received against the services provided by the appellant is also reflected in the book of accounts of the Appellant. However service tax paid by the appellant was not commensurate with the amounts received during the corresponding periods. Investigations were conducted and the statements of concerned persons were recorded. 2.2 Show cause notices were issued to the respective branch offices of the Appellants demanding the service tax charged and collected from their customers/ clients, but not deposited with the government. The show cause notices also proposed penalties under Section 76, 77 & 78. Penalties were proposed on the concerned persons. 2.3 The show cause notices have been adjudicated by the concerned commissioners confirming the demand of taxes due and imposing the penalties. The details of the said order and appeals filed are indicated in table 1- Table 1- Details of Order in Original and Ap....
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....el Demand of Service Tax Rs. 11,74,25,613/- Penalty Section 76 Rs. 4,94,89.037 +Rs 81,07,430 + Rs. 2,27,31,990 Penalty Section 77 Rs. 15,000 + Rs. 5000/- on Diwan Rahul Nanda Penalty Section 78 Rs2,50,00,000+ Rs. 2,50,00,000+ Rs. 2,20,00,000 Appeal No ST/723.724,731 & 732/12-MUM Order in Original No 1315/STC-I/SKS/12-13 dated 30-June 2012 Period 2004-05 to 2010-11 Branch Saki Naka Demand of Service Tax Rs. 1,57,99,282/- Penalty Section 76 Rs. 5,99,07,443+Rs 2,25,32,667+ Rs. 52,80,273/- Penalty Section 77 Rs. 15,000 + Rs. 5000/- on Diwan Rahul Nanda Penalty Section 78 Rs. 10,02,00,000/- + Rs. 4,02,00,000/- Appeal No ST/87575/15-MUM Order in Original No GOAEXCUS-000-ADC-016-13-14 dated 28-January-2014 Period 2010-11 Branch Goa Demand of Service Tax Rs. 33,44,023 Penalty Section 76 Rs. 200/- per day or 2% (whichever is higher) Penalty Section 77 Penalty Section 78 2.4 Aggrieved by the orders as detailed above, Appellants have filed these Appeals. 3.1 Matter has been posted for hearing quite a number of times and most of the times representative of counsel (Ms Keyuri Desai, Advocate) for the appellant sought adjournment. Details o....
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.... the above direction, the miscellaneous application is disposed and the appeal will be taken up on 08.08.2017." 08/08/2017 Appellant to submit all details as called for by the order dated 20/07/2017 to the officer of Learned Commissioner (AR) for reconciliation by 31.08.2017 and report to Tribunal. Call on 31.08.2017. 31/08/2017 Call on 4/9/2017 as prayer of Sri Tahir Parande (Proxy Counsel for Appellant) that Sri C A Bihari is suffering from Dengue. 4/09/2017 No bench. Matter adjourned to 28/09/2017. 28/09/2017 Miscellaneous application filed was dismissed, vide order No M/8996389964/17/STB, stating as follows: "Appellant is not at all co-operative to examine its averment in miscellaneous to examine its averment in miscellaneous applications. Accordingly MA/927732 & 927733/17 are dismissed." 10/10/2017 Time over matter adjourned to 07/11/2017 07/11/2017 Adjourned to 20/11/2017 20/11/2017 Time over matter adjourned to 20/12/2017 20/12/2017 No Division Bench matter adjourned to 02/02/2018 02/02/2018 No Division Bench matter adjourned to 07/03/2018 7/3/2018 Matters are Adjourned to 12/04/2018 as per request of advocate 12/4/2018 Matters are Adjourned to 12/04/....
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....the service tax due from them by the appointed day. However they had deposited the entire service tax due from them albeit after some delay. 4.4 While passing the said orders adjudicating authorities have failed to take into consideration the deposits made by them towards the discharge of service tax liability through cash payments and by debits in CENVAT account, and have confirmed the entire demand of tax against them. 4.5 Adjudicating authorities have passed the said orders without taking into consideration the acute financial hardships being faced by them for which they were not in position to deposit the tax by appointed day. 4.6 Certain portions of the demands were time barred as they were clearly showing the details of payments received service tax due thereon and service tax deposited by them in their ST-3 returns filed by them from time to time. 4.7 Since they were operating from more than 35 branch offices. Each branch was raising bills and collecting the payments. Their client base is wide spread and there is also overlap of the jurisdictions of the branch office. A sometimes payment against some bill raised by a branch office is also received in some other branch of....
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....lected as tax would never be unearthed. He concluded by stating that the penalty's have been correctly imposed on the Appellant for their act of not depositing the tax in time. He also submitted that on the basis of investigations undertaken by DGCEI the show cause notices have been issued to various branch offices of the Appellant across the country. In the Appellants own case, on the basis of same facts and same investigation CESTAT Delhi bench has already upheld the demands and penalties imposed as per the decision reported in 2016 (41) S.T.R. 634 (Tri. - Del.). He also relied upon the Decision of Delhi High Court, wherein the High Court has not only upheld the imposition of mandatory penalty upon the Appellant, but has held that tribunal could not have allowed the option of payment of 25% of the mandatory penalty, as has been allowed by tribunal in the above referred decision [2016 (41) S.T.R. 612 (Del.)]. He argued for dismissal of all the appeals 5.2 In their submissions made revenue has contended as follows- i. Sum of the demand confirmed involves about Rs. 31.8 Crores in all the appeals under consideration. The appellants have defrauded the government of its legitimate r....
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....de were not considered by the Jurisdictional Authorities. These details were also considered again by and vide report dated 20.11.2017, the said submissions have been rejected by the jurisdictional authorities. viii. Non Cooperation and evasive/ delay tactics of the Appellant were also observed and recorded by the tribunal in its order No M/89963-89964/17/STB dated 28.09.2017. Tribunal has recorded "Appellant is not at all co-operative to examine its averment in miscellaneous applications. Accordingly MA/92732 & 92733/15 are dismissed. ix. Thus the submission of the appellants that certain more documents are to be examined is without any merits. x. With respect to the challans submitted by the Appellants along with the written submissions made on 23/07/2018, the verification was again caused. On sample verification of the list submitted it was found that these documents were the same documents in respect of which the verification was earlier caused and the payments made in these documents could not have been justified against the payment of service tax demanded. 6.0 We have considered the submissions made by both the Appellants and revenue. Undisputed fact is that Appell....
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....ust dead letters. This cannot be the legislative intent. Hence financial hardships cannot be brought within the purview of the expression "reasonable cause" used in Section 80 of the Finance Act, 1994. What was found to be "reasonable cause" by the Tribunal's Larger Bench decision in the case of ETA Engineering Ltd. (supra) is not the one pleaded by the present assessee. Ld. Consultant has argued that, as in the case of penalties under the Central Excise Act, there should be no penalty on the ground of delay of payment of service tax prior to issuance of a show cause notice. I am unable to accept this proposition inasmuch as the penal provisions relating to service tax are couched in a language different from those relating to Central Excise Duty. The penalties have been correctly quantified by the original authority." 7.0 Similar View was expressed in case of Shayna Construction [2010 (262) E.L.T. 1006 (Tri.-Ahmd.)], and United Udyog [2015 (39) STR 148 (T-Kol)]. The observations of tribunal in case United Udyog are reproduced below: "5. Heard both the sides and perused the records. Issue involved is whether financial hardship is a reasonable cause for exercising the powers by t....
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....ations of M/s Top Security Ltd. Vide assessee letters dated 05.10.2017, 06.10.2017 & 09.10.2017 (copy of letters enclosed for reference), this office again undertook reconciliation exercise and incorporated necessary changes in terms of additional submissions of the assessee and the records available in this office. Accordingly, in continuation of this office letter of even no dated, please find enclosed herewith the reconciliation of service tax along with cesses, wherever applicable, payable and paid in respect of M/s Tops Security Limited, prepared as per the direction contained in your above referred letter. The reconciliation is done on the basis of the following document received in the office of Hon'ble CESTAT, Mumbai on 04.08.2017 and further additional submissions dated 05.10.2017, 06.10.2017 & 09.10.2017, received in this office:- a. Copies of the SCN's b. Copies of ST-3 return c. Copies of Taxpaying challans (TR-6/ GAR-7) d. Tax liability and payment worksheets prepared by and submitted by M/s Top Security Ltd. Factors applied and documents considered in reconciliation:- (1) Where the CIN of the Challans are not matching with their amounts, the same have ....
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.... indicating why each document could not have considered for reconciliation. The document wise reasons submitted are mentioned in table below: Table 4 Reasons for not accepting certain documents towards payments made Sl No Amount Document Date Year Reason for Denial Appeal No ST/326/12-MUM 1 2,54,155 TR-6 13-April-04 2004-05 1 34 1322726 Bank Certificate 13-Dec-07 2006-07 2 35 1212366 Bank Certificate 13-Dec-07 2006-07 2 Appeal No ST/622/12-MUM 33 13,68,207 Challan No 823472 20-Dec-07 2006-07 3 34 1,02,56,799 Challan No 823472 20-Dec-07 2007-08 3 Appeal No ST/63/11-MUM 1 59,674 TR-6 20-Apr-04 2004-05 4 27 88,509 TR-6 2-May-06 2006-07 5 33 1,23,634 TR-6 2-Nov-06 2006-07 5 35 1,44,473 TR-6 28-Dec-06 2006-07 5 36 1,47,281 TR-6 5-Feb-07 2006-07 5 52 1,72,595 TR-6 5-Nov-07 2006-07 5 Appeal No ST/723/12-MUM 40 46,15,579 Challan No 823463 20-Dec-07 2006-07 3 41 12,26,158 Liability Reversed 30-Sep-07 2007-08 6 42 12,56,815 Challan No 823463 20-Dec-07 2007-08 3 43 1,17,018 Ban....
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....k statement is on account of payment of Salary. 8.4 Thus it is seen that Revenue has fairly complied with the directions of the Tribunal in order dated 20th July 2017 by reconciling the payments made against the demands. Proper reasons has been recorded for not admitting certain payments. After such reconciliation also as on the date of reconciliation large amounts still need to be recovered from appellant. 9.1 From the facts as discussed above it is quite evident that appellants have been collecting the service tax from their customers/ clients but were not depositing the same with the exchequer. They were rotating the amounts collected as tax for their personal gains. They were also guilty of not filing the returns on due date to declare their tax liabilities and hence they have definitely suppressed the details of tax collected and payable to the exchequer. Thus demands made invoking extended period as provided by proviso to section 73(1) is justifiable and for the same reasons appellants liable to penalty under Section 78 of the Finance Act, 1994. Further for various contraventions such as not payment of tax by the due date and delay in filing the returns for the peri....
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....8 of the Finance Act should be given to them as the same had not been done in the impugned order. In this regard, we find that the Gujarat High Court in the case of CCE, Ahmedabad v. Ratnamani Metals Ltd. - 2013-TIOL-1124-HC-Ahd-CX = 2013 (296) E.L.T. 327 (Guj.) has held as under : "At no stage, either in the Order-in-Original or in the order of Commissioner (Appeals), the assessee respondent has been given the benefit of payment of reduced penalty - Court has followed a consistent view that the assessee is required to be given the option by the adjudicating authority where he is asked to pay a duty demand with interest and 25% of penalty within 30 days from the date of adjudication of the order and in such case, he would be liable to pay only 25% of the penalty - whenever such option had not been given, the remand had been made to the concerned authorities and the period of 30 days is being considered, if in case option is not given earlier, from the date of availing such option - since no option was given, the Tribunal can award such an option to the assessee." 7. In the light of the foregoing, we do not find any merit in the appeals except to the extent that the benefit of 2....
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....n of availing the benefit of payment of reduced penalty in terms of the second proviso to Section 78(1) of the Finance Act, 1994 was to provide an incentive for prompt payment of the service tax and interest that is due. When an assessee does not wish to contest the service tax liability or even when it wishes to contest such liability, but is prepared to pay upfront the service tax and interest without prejudice to its rights and contentions, the statute provides an option of payment of reduced penalty to the extent of 25% of the service tax. This is, of course, subject to payment of not only the service tax and interest but also the reduced penalty within 30 days of the "communication of the order" of the adjudicating authority. 24. The SCN issued to an assessee invariably mentions the statutory provisions under which the demand for service tax, interest and penalty is proposed to be raised. There can be no question, therefore, of the assessee being unaware of the provisions of the statute. It is also very likely that in the adjudication proceedings the assessee, who invariably has an authorized representative to put across its case to the adjudicating authority, will make a ....