TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 115
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.... 2004-05 to 2008-09is demanded on M/s Tops Security Ltd, Flat No 2/9, Block B, Tara Apartment Sidhgora Bagan Area Jamshedpur 831009 and they are directed to pay the same under proviso to Section 73(1) of the Finance Act, 194. On making the payment as ordered above, M/s Tops Security Ltd shall submit proof of such payment. Before the jurisdictional Divisional officer who on receipt of such information shall determine the interest amount payable by M/s Tops Security Ltd and shall intimate the amount of interest payable by M/s Tops Security Ltd. M 2. A penalty of Rs. 1 crore (Rupees One Crore) is imposed upon M/s Tops Security Ltd under Section 76 of the Finance Act, 1994; and 3. Penalty of Rs. 200 per day delay in payment of service tax short paid or submission of ST-3 Returns whichever is later is imposed under section 77 ibid." 1.3 By his order Commissioner Bhubaneswar held as follows: "In view of my findings, I order as under- 5.1 I confirm Service Tax of Rs. 58,03,816/- (Rupees Fifty Lakhs Three Thousand Eight Hundred and Sixteen only) on M/ Tops Security Limited Plot No 20, Acharya Vihar Bhubaneswar, Dist Khurda 751022 u....
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....tation of funds. * After investigations conducted by the DGCEI they are depositing the service tax. 2.3 After completion of investigations it was determined that outstanding tax payable by the appellant in Jamshedpur branch and Bhubaneswar branch is as indicated in table below: Year Taxable Vale Amount Payable Amount Paid Amount Outstand ing At Beginning For Year Total Jamshedpur Branch 04-05 5032343 0 714905 714905 217753 497152 05-06 4071646 497152 437601 934753 0 934753 06-07 12291566 934753 1504488 2439241 0 2439241 07-08 23871947 2439241 2949558 5388799 752609 4636190 08-09 36162759 4636190 4399634 9035824 0 9035824 Total 81430261 10006086 970362 Bhubaneswar Branch 04-05 7119102 37758 939848 977606 473924 503682 05-06 6793189 503682 383622 887304 334886 552418 06-07 10220004 552418 779307 1331725 908724 423001 07-08 35070881 423001 3663281 4086282 208550 3866822 Total 5766058 1926084 2.4 In case of Jamshedpur B....
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....ant for the Appellant and Shri M Suresh joint Commissioner, Authorized Representative for the revenue. 3.2 Arguing for the appellants learned Chartered Accountant submitted - A. Jamshedpur Branch * They do not dispute the demand of service tax on merits but there are certain computational error in determination of demand as indicated in table below: Year Service Tax including Edu Cess and SHE Cess payable As per SCN/OIO As per Actual and Rate prescribed Taxable Value Amount Rate (%) Taxable Value Rate (%) Amount 04-05 5032343 714905 14.2 1 5032343 10.2 465789 05-06 4071646 437601 10.7 5 4071646 10.2 376867 06-07 12291566 1504488 12.2 4 12291566 12.2 4 1340420 07-08 23871947 2949558 12.3 6 23871947 12.3 6 2625999 08-09 36162759 4399634 12.1 7 36833585 12.3 6 4051825 81430261 10006186 82101087 8860900 * In view of the above computational errors excess demand to tune of Rs. 11,21,563/- has been made which needs to be rectified....
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....ting to Rs. 7,90,940/- * If all the above payments made by them as detailed above is taken into account then they have discharged the entire service tax liability along with the interest before the adjudication of the matter. * Out of the above amounts paid by them Commissioner has agreed to the payment of Rs. 37,47,040/- towards Service tax and Rs. 5,74,285/ -towards interest and has appropriated the same towards the service tax demanded from them. * Since the Appellants had taken the registration of Bhubaneswar Branch on 2nd September 2008 prior to start of investigation they had no intention to evade payment of tax. In fact they paid the tax immediately as indicated above. Investigation in the case even at Ahmedabad branch started with issuance of summons dated 04.11.2008. Since they were complying with the formality as provided by the statue and had paid major amount of service tax even before the issuance of show cause notice and remaining amount just after the issuance of Show Cause Notice, extended period of limitation should not be invoked in their case. C. For both the Branches. * Since they are not guilty of evasion of tax by way of resorting to suppression,....
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.... invoices on their customers/ clients for the services rendered along with the applicable taxes. They were receiving the payments inclusive of the service tax amount but were not depositing the same. They were also not filing the ST-3 returns regularly as required by the Finance Act, 1994 read along with the Service Tax Rules, 1994. The plea advanced by the appellants for not depositing the tax is on account of financial hardship. If such plea is entertained, then not only the scheme of indirect taxation will be impacted but the entire mechanism of fair trade and commerce will collapse. Can really financial hardship, be the reason for holding on the money collected from the customer/ client be valid reason for nonpayment of tax due to the government. In the scheme of indirect taxation the tax depositor is only a conduit for depositing the tax collected from the recipient of taxable service to the government. At the cost of repetition we emphasize that the amounts collected as tax from the customer/ client is not the money in the hand of tax payer but only held in trust by the said taxable person for the period and to be deposited with revenue in manner as prescribed by the taxing s....
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.... 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 25% of mandatory equal penalty under Section 78 ibid is required to be extended to the appellants. Accordingly the appeals Nos. ST/55809/2013 and ST/55810/2013 relating to Show Cause Notices dated 10-4-2011 and 20-10-2011 are dismissed and Appeal No. 55715/2013 relating to the Show Cause Notice dated 20-10-2009 is partially allowed only to the extent that the penalty of Rs. 8,15,44,386/- imposed under Section 78 of Finance Act, 1994 will be reduced to 25% of the said amount provided the service tax and interest are paid within 30 days from the date of communication of this order and the said reduced penalty 25% of 8,15,44,386/- is also paid within the said time i.e. 30 days from the date of communication of this order." This order of Delhi Bench has been upheld by the Hon'ble Delhi High Court as reported at [2016 (41) ELT 612 (Del)]. However while agreeing with the demand of tax with interest and penalty Delhi High Court has set aside that part of ....
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....re and of the Allahabad High Court in Commissioner of Customs and Central Excise v. Majestic Auto Ltd. - 2013 (289) E.L.T. 95 (All.) and held that the interpretation of Section 11AC 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 pre-domin....
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....t is also very likely that in the adjudication proceedings the assessee, who invariably has an authorised representative to put across its case to the adjudicating 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 a....
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....stead of total tax payable as per SCN/OIO of Rs. 1,00,06,186/- tax payable should have been Rs. 88,60, 900/-). Taking the note of this submission we direct the adjudicating authority to recomputed the amount of demand after taking into account the submissions made by the appellants in this regard. Appellant have also contended and produced certain tax payment documents which have been taken on record. We do not record any finding on these documents as it cannot be part of the appeal to tribunal. What so ever payments have been made by the appellant should be taken note of the jurisdictional officers while making recoveries. 4.4 Appellant have claimed that they had made considerable amount of payment during the course of investigation and prior to issuance of Show Cause Notice and hence taking note of the payments made penal proceedings under Section 78 of the Finance Act, 1994 should have been adjudicated in their favour or else they should have been allowed the benefit of Section 80. The said submission made by the appellant vis a vis the Interest under Section 75 & penalty under Section 78 needs to rejected in view of the decision of Bombay High Court in case ....
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....from 11-5-2001 by which sub-sections (2A), (2B) and (2C) are inserted in the main Act. Naturally, the Explanation (1) to sub-section (2B), reproduced hereinabove, was neither on the statute book nor was under consideration before the Tribunal or before the Hon'ble the Supreme Court. If the effect of Explanation is taken into consideration, the liberty to pay evaded excise duty as may be ascertained by Central Excise Officer u/s. 11A(2) or on the basis of duty ascertained by himself, was not available to the assessee prior to 11-5-2001. We must say that by insertion of sub-sections (2A) to (2C) and more particularly Explanation (1) to sub-section (2B), the position stands drastically changed. Since there is no liberty to the assessee, who has evaded the duty intentionally, by exercising fraud, collusion etc. for the purpose, the liberty to pay the evaded duty under subsection (2B) is not available and the terminal portion of sub-section (2B) "......and inform the Central Excise Officer of such payment in writing, who on receipt of such information shall not serve any notice under sub-section (1) in respect of the duty so paid;" cannot render any assistance to such an assessee. I....
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....) or has paid the duty under sub-section (2B) of Section 11A, shall in addition to the duty be liable to pay interest at such rate ........" The terminal part in the quotation above, which is couched with the words "shall" and "be liable" clearly indicates that there is no option. As discussed earlier, this is a civil liability of the assessee, who has retained the amount of public exchequer with himself and which ought to have gone in the pockets of the Central Government much earlier. Upon reading Section 11AB together with Sections 11A and 11AA, we are of firm view that interest on the duty evaded is payable and the same is compulsory and even though the evasion of duty is not mala fide or intentional. 11. The question then arises whether payment of duty before issuance of show cause notice exempts the assessee from liability to pay interest u/s. 11AB. Learned Counsel Shri Kolte had placed reliance upon concluding para in the judgment of CESTAT Bangalore in the matter of Rashtriya Ispat Nigam Ltd. v. Commissioner of Central Excise, Visakhapatnam, which reads thus : "In these circumstances, there is no justification on the part of the department to impose penalty u/s. 11AC ....
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....nted by sub-section (2B) of Section 11A, he is liable to pay interest, on the same even if the amount is paid, and he is liable to further interest also on the amount of short duty as ascertained by the department if that exceeds the self-assessment and to that extent. By this explanation, we are convinced that even if no notice is issued by the department because it agrees with the amount of short duty paid by the assessee as ascertained by the assessee himself under sub-section (2B), still the assessee shall be liable to pay interest over the same even without going through the process of determination as contemplated by Section 11A(1) and (2) commencing with a show cause notice and culminating with an order of the Central Excise Officer. The show cause notice and determination can go on if the short duty is not paid, but even if short duty is paid by taking liberty under sub-section (2B), we are afraid, that does not absolve the assessee from the liability to pay interest thereon. In case by proceeding with the show cause notice, if the Central Excise Officer determines short duty payable higher than as ascertained and paid by the assessee himself, the assessee would be liable t....
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.... In view of these meanings obtained from the Law Lexicon and the Oxford Dictionary attached to the word "but" and to the phrase "but for", the Advocate pleaded that it should be interpreted that had sub-section (2B) not been in existence or rather the facility to pay the short duty was not available, the party would have been required to pay interest u/s. 11AB and if the facility is available, on compliance of the same, the party would not be liable to pay interest. Taking into consideration that the tail piece relied upon by learned Counsel is included in the Explanation to particular sub-section (2B), we are unable to accept the interpretation as tried to be attributed by the learned Counsel for one simple reason that an explanation ought to be therefor the purpose of explaining the main provision, it cannot nullify the effect of main provision. If Explanation (2) interprets as attempted by learned Counsel due to the phrase with which it ends "but for this sub-section", the explanation will have to be ignored being in conflict with sub-section (2B), which it explains. However, the meaning of this clause "but for this sub-section" can be enlightened when we refer to Section 11AB....
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.... for re-computation of tax payable, the authority shall reconsider the quantum of penalty and make it equal to the tax demand. 4.6 Appellants have claimed that penalties in their case should be waived of by invoking section 80 of Finance Act, 1994. We do not find any merits in the request made. This tribunal has in case of International Security Academy P Ltd Vs CCE Chennai [2006 (1) STR 289 (T-Chennai)] considered and rejected such a plea. They have also held that for this reason the benefit of Section 80 of Finance Act, 1994 can also be not extended for determination of penalties. The relevant para of the said decisions 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 har....