TaxTMI 
TaxTMI 
2018 (10) TMI 268
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....n under taken by Director General Central Excise 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....
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....ction 77 Rs. 5,000 + Rs. 5000/- on Diwan Rahul Nanda Penalty Section 78 Rs. 1,77,80,402/- Appeal No ST/622/12-MUM Order in Original No 10-12/STC-I/SKS/12-13 dated 18-May-2012 Period 2004-05 to 2010-11 Branch Lower Parel 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 ....
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....from revenue to undertake such verification. 4. Appellant is directed to report to the office of the learned Commissioner (AR) on Monday i.e. 24.07.2017 and submit a reconciliation statement for examination. The reconciliation report shall reach the tribunal by 08.08.2017 from the learned DR for disposal of the Appeal since the appellant has grievance that it is suffering from financial hardship. 5. With 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. According....
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....d when the deposits made towards service tax, either after issue of show cause notice or before passing impugned orders or after passing impugned orders, but before filing of appeal, in a case where, after consideration of deposits made from time to time, the liability of service tax would be Nil and/ or marginal amounts. 4.3 Appellants have in their appeal argued that during the period under consideration they were facing acute financial hardship and hence were not in position to deposit 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....
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....nfidence, as the challan produced do not bear the stamp etc, of the bank in which the said amounts have been deposited. The bank statements etc. are not the proper documents for payment of taxes. He submitted that Appellants had been collecting the tax amount from their customers but not depositing the same as provided in law. It is also an admitted fact that appellants had not filed the ST-3 return in time as provided by law. But not for the investigations undertaken by DGCEI, appellants the fact of non deposit of the amounts collected 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 up....
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.... bench of tribunal in case of Master Marine Services P Ltd vs Commissioner of Service Tax Mumbai [2014 (35) STR 79 (T Mumbai). vi. As per the directions contained in the order dated 20.07.2017, reconciliation of the payments made by the Appellants was undertaken by the revenue, and as per the report submitted by the jurisdictional authorities, the outstanding service tax payments including interest amounts to Rs. 54,95,06,237/-. Copy of this reconciliation report was also made available to the appellants. vii. Appellants have vide e-mail dated 13.11.2017 submitted certain payments made 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 s....
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.... International Security Academy P Ltd Vs CCE Chennai [2006 (1) STR 289 (T-Chennai)] considered and rejected such a plea. The relevant para of the said judgments are reproduced below: "4. after giving careful consideration to the submissions, I find that the only reason stated by the assessee in their reply to the show cause notice, for delay of payments of service tax, is financial crisis. Financial crisis is a universal plea, which could be made by any assessee. If it is accepted as coming within the meaning of the expression "reasonable cause" under Section 80 ibid, the penal provisions of Sections 76 to 79 of the Finance Act will be just 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 ....
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.... pay the tax on account of bona fide mistakes or under the impression that tax was not payable due to interpretation, and therefore they could not show that there existed reasonable cause." 8.1 With regards to quantification of demand the verification was caused on the basis of the documents submitted by the Appellants. After considering all the documents submitted, and the demands confirmed jurisdictional officers have submitted the report as follow vide their letter F No TOPS Reconciliation/89/V/MB/2017-Mumbai dated 30th October 2017. "Consequent upon submission of additional information/ data/ details of Service Tax payments in respect of branches/ registrations 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 r....
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....42,39,230 2,50,57,256 13,82,40,469 16,32,97,725 5 ST/326/12-MUM 9,90,57,772 27,94,614 12,64,85,254 12,92,79,868 6 ST/63/11-MUM 56,30,458 27,67,515 73,28,752 1,00,96,26 7 7 ST/87575/15-MUM 34,44,675 0 48,46,967 48,46,967 8 ST/342/10-MUM 2,29,98,633 53,42,799 2,62,94,73 3 3,16,37,53 2 9 ST/128/10-MUM 3,75,69,008 67,31,285 4,17,58,70 8 4,84,89,99 3 10 ST/564/10-MUM 1,45,65,041 0 3,07,67,32 5 3,07,67,32 5 Total 31,79,67,99 2 6,99,84,973 47,95,21,265 54,95,06,238 8.3 Appellants have vide their letter dated 14.11.2017, again submitted documents which in their view should be taken up for reconciliation, though these documents have earlier been submitted also. Jurisdictional officers again considered these documents and have vide letter dated 20.11.2017 given report 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 Deni....
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....Reasons for Denial 1 Proof of payment is not submitted by the party 2 The party has submitted a bank certificate but this is not a prescribed document evidencing payment of service tax and other dues. Moreover the certificate does not mention the liability period and proper accounting code 3 No records of this payment 4 The amount relates to the liability of the month of March 2004 and the assessee has claimed to adjust against the liability of the opening balance. 5 Challan has been prepared but never submitted to bank since there is no receiving stamp of the bank on challan. 6 The assessee ha himself reversed the liability in his accounts without showing any concrete reason thereof 7 The party has claimed the payment of Service tax on the basis of a bank statement but this is not a prescribed document evidencing payment of service tax and other dues. Moreover the it can be confirmed whether it is service tax, interest, penalty or any other dues and the period is also not mentioned. 8 The assessee has not mentioned the month for which the payment is being made, the....
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....ntion on their part behind the short payment/delayed payment for which there was reasonable cause inasmuch as due to downfall in operations of the company, they suffered severe financial hardship which disabled them from paying impugned service tax and they had been submitting their ST-3 returns regularly. They also pleaded for the benefit of reduced 25% of the mandatory equal penalty in terms of proviso to Section 78 of Finance Act. 5. The ld. AR stated that the appellants deliberately did not pay the service tax due in spite of having collected it and their appeals need to be dismissed. 6. We have considered the submissions. It is seen that the appellants have not denied that the impugned service tax was leviable and therefore with the consent of AR we take up the appeals waiving requirement of pre-deposit. They have been collecting service tax as part of gross amount charged and therefore non-deposit thereof on the ground of financial crunch is totally unacceptable. Financial crunch in no circumstance can justify non deposit of service tax collected. Obviously thus there is not a great deal of discussion required to conclude that the appellant....
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....t, in case of appellants reported at 2016 (41) S.T.R. 612 (Del.) "21. To round up the discussion of the case law on Section 11AC of the CE Act, the pre-dominant judicial view as evidenced by the decisions of the High Courts of Bombay, Allahabad and this Court is that, notwithstanding the circular requiring an adjudicating authority to indicate in the adjudication order the option available to an assessee of paying reduced penalty, that option cannot be made available at the appellate stage by permitting the assessee to pay the reduced penalty within 30 days of the order of the appellate authority. 22. As far as Section 78(1) read with Section 83 of the Finance Act, 1994 is concerned, apart from the fact that Section 11AC of the CE Act is not ipso facto applicable, the circular of the C.B.E. & C. issued in the context of that provision requiring the adjudicating authority to mandatorily state in the adjudication order the availability of the option of payment of reduced penalty, is also not applicable. In other words, an adjudication order levying penalty under Section 78(1) of the Finance Act, 1994 does not have to mandatorily spell out the option available to an ....
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....tion 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 because the appellant was not told of the statutory provision under which he can file an appeal. 26. The upshot of this discussion is that an appellate authority cannot at the appellate stage give the option to an assessee to pay the reduced penalty within a time that is beyond what is stipulated in the third proviso to Section 78(1) of the Finance Act, 1994. The statute is explicit. The second proviso states that the payment of the service tax and interest has to be paid within "paid within thirty days from the date of communication of order of the Central Excise Officer determining such service tax" and the third proviso states that the reduced penalty that has been determined also has to be paid "within the period of thirty days referred to" in the second proviso. The option to pay the reduced penalty comes to an end on the expiry of thirty days from the da....