TaxTMI 
TaxTMI 
2019 (2) TMI 866
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....s" 2.1 Appellants are nationalized bank having branches across the country. Earlier they were having Service Tax registration branch wise and were discharging the service tax liability branch wise. The returns were also filed branch wise. 2.2 During course of Audit of their branches in Hyderabad it was observed that branches were wrongly computing the service tax payable and thereby short paying the service tax. Similar discrepancies were observed in other branches during audit conducted by Bhubaneswar I Commissionerate. On the basis of audit undertaken Show Cause Notices were issued to each branch, demanding the service tax short paid by invoking the proviso to Section 73 (1) of Finance Act, 1994. Along with demand interest and penalty under section 76, 77 & 78 were also proposed. These SCN's covered period from 1st April 2004 to 31st March 2010. 2.3 Subsequently Appellants obtained centralized registration in Mumbai and accordingly 171 of said show cause notices have been taken up for adjudication by the jurisdictional authorities in Mumbai. 2.4 After considering the submissions made by the appellant Deputy Commissioner Division II Service Tax -1 Mumbai, upheld the de....
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....d." 2.5 Against the order of adjudicating authority appellants filed appeal before Commissioner (Appeal) who decided the matter as per the order referred in para 1, supra. 2.6 Aggrieved by imposition of penalty appellants are in appeal before us. They have deposited the entire amount of Service Tax demanded i.e. Rs. 91,22,577/- along with interest of Rs. 3.17,799/- 3.1 We have heard Shri Bharat Raichandani Advocate on the behalf of Appellant and Shri Dilip Shinde Assistant Commissioner (Authorized Representative) on behalf of revenue. 3.2 Arguing on behalf of appellants learned advocate Submitted- i. There was no malafide intention on the their part to evade the payment of duty and the short payment occurred duty to erroneous practices being followed at the branch level. The short payment thus occurred due to reason beyond their control. However when they identified the short payment they came forward and paid the Service Tax short paid, even when certain demand would have been time barred. ii. Section 78 is not applicable in their case as they had no malafide intention to evade tax, further in case the total demand of service tax was nothing in comparison to the ....
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....uance of Show Cause cum Demand Notices. In certain cases they have also paid the interest. This short payment would have gone unnoticed if it were not for the department who pointed out the same. The details of taxable values representing Branch income was forwarded to the branches by Belapur branch, which was not a registered premises and therefore the local service tax official in-charge of branches would be unable to detect this from the scrutiny of the ST-3 returns. M/s. SBI had willfully mis-stated the value of taxable services in the statutory ST-3 returns, because it is on record that the first SCN issued to the branches were somewhere in April 2010 and last the last one sometime in September 2010. Which indicates that in April 2010 the bank was aware of the fact that they were short paying service tax & chose to ignore the same, which leads to the conclusion that they were under the presumption that payents would be made only as and when a branch receives SCN which clearly indicates that they, instead of coming clean and disclosing all facts to the department instead suppressed the same with clear intent to evade payment of service tax. Therefore the judgments relied upon b....
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....d under any section. I find the adjudicating authority has imposed the penalty under Section 78, only in respect of those SCNs where the provisions of the said section were invoked in the show cause notice and has refrained from imposition of penalty under Section 76 in the cases where penalty under Section 78 was imposed. Thus, I do not find any basis to entertain the appellant's argument except in respect of SCN dated 16.8.2010 referred above. 11. The appellant has also contended that they had no malafide intention in wrongly determining the assessable value. It has also been submitted that the mistake was committed by their employees who were not to gain anything by committing such a mistake. In this regard it is observed that the details of taxable value representing Branch income was regularly forwarded to the branches by Data Centre of SBI located at Belapur and the service tax was paid by the branches on this income till March 2009. This practice continued till March 2009 as indicated in para 5 of the impugned order. From April 2009 onwards, when the facts came to the light, branches were directed to add the amount of service tax payable by the branch for the last month a....
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....hough the value of commission declared by them in the return was lower than the value of commission received in their books of account. It is therefore clear that the appellant had misdeclared the facts and had suppressed the correct value of taxable service. As such, invoking the penal provision of Section 78 are fully justified. 12. Appellant have also contended that extended period cannot be invoked when records were not audited by the Department every year. I do not find any such statutory provision which requires the Department to conduct annual audit. Honourable Tribunal in case of Star India Pvt. Ltd. 2015(38)STR 884 (Tri-Mumbai) has held that invocation of extended period is justified when an assessee operating under self-assessment procedure failed to declare complete particulars of the service rendered. Ratio of this judgment is squarely applicable here." 4.4 The argument of the Appellants to the effect that they had paid the service tax prior to issuance of Show Cause Notice do not hold goods in view of the decision of Bombay High Court in case of Shri Ram Aluminium Pvt Ltd [2009 (242) ELT 202 (BOM)], Hon'ble High Court held as follows: "3. The Respondents aggri....
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....ment of the Supreme Court cannot be held to have concluded the issue on there being a need for determination of duty under Section 11A(2). 7. We have heard learned Counsel. In so far as mandatory penalty is concerned, the law stands now concluded in Dharamendra Textile Processors (supra). The law as now settled is that there is no jurisdiction in the authority to impose penalty lesser than the mandatory penalty which has to be co-extensive with the duty which is payable. The Supreme Court has further held that there is no requirement of existence of mens rea. Mens rea as understood in criminal law is not an essential ingredient for holding a delinquent liable to pay penalty for a tax delinquency which is a Civil obligation, remedial and coercive in its nature, and is far different from the penalty for a crime or a fine or forfeiture provided as punishment for the violation of criminal or penal laws. 8. Having so said we may now consider the first limb of argument as raised by the learned Amicus Curiae. The relevant portion of Section 11A of Central Excise Act, 1944 reads as under :- "11A. Recovery of duties not levied or not paid or short-levied or short-paid or erroneousl....
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....ty has reduced or increased, as the case may be, shall be taken into account." 10. The Judgment in Dharamendra Textile Processors (supra) came up for consideration before the Supreme Court in Rajasthan Spinning & Weaving Mills Ltd. (supra). It is necessary to reproduce paragraphs 2 and 15, which read as under :- "2. What are the conditions and the circumstances that would attract the imposition of penalty under Section 11AC of the Central Excise Act ("The Act" hereinafter)? In the two cases before us the Tribunal has taken the view that there was no warrant for levy of penalty since the assessees had deposited the balance amount of excise duty (that was short paid at the first instance) even before the show cause notice was issued. On the other hand, on behalf of the Revenue, the appellants in the two appeals, it was contended, relying upon a recent decision of this Court in Union of India v. Dharamendra Textile Processors, 2008 (231) E.L.T. 3 (S.C.) that mere non payment or short payment of duty (without anything else) would inevitably lead to imposition of penalty equal to the amount by which duty was short paid. In our view the reason assigned by the Tribunal to strike dow....
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....onsideration in Rajasthan Spinning & Weaving Mills. In our opinion it is not possible to accept the said submission considering the last sentence of para.2 of the judgment which we again reproduce and which reads as under :- "We completely fail to see how payment of the differential duty, whether before or after the show cause notice is issued, can after the liability for penalty, the conditions for which are clearly spelled out in Section 11AC of the Act." 13. It is, therefore, clear that though the Supreme Court has not expressly referred to the argument now advanced by the learned Amicus Curiae, nevertheless the Supreme Court was clear that to impose penalty the conditions in Section 11AC of the Act must be complied with. Under Section 11AC as already set out the requirements are firstly, that there must be intent to evade payment of duty and secondly the duty ought to be as determined under sub-section (2) of Section 11A. It is, therefore, clear that it is only on these two requirements being followed that penalty is imposable. The determination of duty admittedly is under Section 11A. The other limb of argument is that once the duty is paid even before the show cause not....
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.... was also imposed to the extent of equal amount of the duty which is 100% penalty. 3. Being aggrieved by the aforesaid order passed by the Commissioner of Customs and Central Excise, an appeal was filed before the Tribunal. Before the Tribunal, only one issue was raised by the respondent, which was with regard to the quantum of penalty under Section 11AC of the Central Excise Rules. No other issue was raised and, therefore, we are not required to go into any other aspect of the matter except for deciding as to whether or not the quantum of penalty imposed by the Tribunal is justified or not in the facts and circumstances of the present case. In this connection, we may appropriately refer to the decision of the Division Bench of this Court in Union of India v. Rajasthan Spinning and Weaving Mills and Commissioner of Customs and Central Excise v. Lanco Industries Ltd. reported in 2009 (13) SCC 448 = 2009 (238) E.L.T. 3 (S.C.). In the said judgment, scope and ambit of Section 11-AC was considered and decided by this Court. 4. The learned counsel appearing for the appellant relies on the said judgment in order of substantiate his submission that the Tribunal was not justified in ....