TaxTMI 
TaxTMI 
2022 (6) TMI 915
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....ted and the Respondent subsequently agreed to the findings of the department and paid an amount of Rs.8,18,61,920/- towards the Service tax which has been proposed to be appropriated in the Show Cause Notice dated 22.12.2009. During the adjudication proceedings, the Respondent also paid the interest due on such Service Tax and prayed for waiver of penalty. By the impugned OIO dated 21.03.2011, the Ld. Adjudicating authority invoked section 80 and dropped the entire amount of penalty as proposed in the SCN and ordered for appropriation of the amounts paid towards service tax and interest. Hence the present appeal by the Revenue assailing non-imposition of penalties invoking section 80. According to the Revenue, the Commissioner was not correct in dropping the penalties invoking section 80 because, this can be invoked only if the assessee proves that there was reasonable cause for the failure. It cannot be said that there was a reasonable cause for failure for the following reasons: a) The demand in the present case was made invoking extended period of limitation under the proviso to section 73(1) and the reasons for invoking the extended period were indicated in the SCN and....
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....ther the Ld. Adjudicating Authority was correct in invoking section 80 of the Finance Act, 1994 to drop the penalty as proposed in the SCN for delay in payment of service tax. This reads as follows: " Section 80. Penalty not to be imposed in certain cases- Notwithstanding anything contained in the provisions of section 76 (section 77 or section 78), no penalty shall be imposable on the assessee for any failure referred to in the said provisions, if the assessee proves that there was reasonable cause for the said failure." Revenue's contention is that the impugned order was not correct because it has, on the one hand, correctly confirmed the demand invoking extended period of limitation which requires suppression of facts to be established and on the other hand, has dropped the proposal to impose penalties invoking section 80 holding that there was reasonable cause for the assessee's failure by the assessee (respondent). In this regard, we find that the issue whether there was suppression of facts or not and whether the penalty under section 78 is mandatory or not having regard to the facts of the case and also that the Respondent is a PSU and that the amounts were payab....
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....nvat credit and, therefore, the lower authority has rightly imposed the penalty under Section 78 of the Finance Act, 1994. 6. After considering the submissions by both the parties and perusal of the provisions of Sections 73, 76 and 78 of the Finance Act, 1994 and the judgments relied upon by the appellant cited supra, I find that Section 73(3) is very clear as it says that if tax is paid along with interest before issuance of the show cause notice, then in that case, show cause notice shall not be issued. In this case, I find that the contention of the appellant that he bona fidely believed that he is not liable to pay service tax but during the audit, the audit party informed him that he is liable to pay service tax, then he immediately paid the entire service tax along with interest. Except mere allegation of suppression, the Department did not bring any material on record to prove that there was suppression and concealment of facts to evade payment of tax. Consequently, in my opinion, the imposition of penalty under Section 78 of the Act is not justified and bad in law. Moreover, in the impugned order, the learned Commissioner (Appeals) has not recorded any finding on ....
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.... impugned order and he has not held that no service tax was payable because the contracts were entered into earlier. He considered this and other submissions to determine if there was suppression of facts on behalf of the respondent and find nothing wrong in noting the submissions by the respondent. 8. It has been submitted on behalf of the Revenue that nothing prevented the assessee from making payment of service tax after the levy was imposed on supply of tangible goods service from 16.5.2008 Theassessee has not paid the service tax on its own and it was paid only after it was pointed out by the officers during investigation.We agree and the respondent assessee has paid the service tax not on its own but after it was pointed out by the DGCEI. This does not prove that the respondent had suppressed facts. It could have declined to pay service tax for the extended period of limitation but it paid the service tax anyway and also CENVAT credit of the service tax so paid as it was entitled to. 9. It has been submitted on behalf of revenue that Revenue neutrality cannot be the basis to determine if there was suppression of facts or not. Reliance was placed on CCE Mumbai vs Mahindr....
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....sideration except the availability of the Modvat credit to the appellant. In this view we set aside the impugned judgment and remit appeal i.e. E/3025/01-Mum. for its fresh decision by the Tribunal in accordance with law. It would be open to the assessee to contend that the extended period of limitation is not available to the Department. Likewise it would be open to the Department to controvert it. The question will be decided on its own merits in accordance with law. 6. The appeal is allowed in the above terms. 11. In the case of DharmpalSatyapal, the assessee was manufacturing the goods but had not obtained central excise registration and had not disclosed the manufacture at all. Before the Supreme Court, it was submitted on its behalf that the assessee was entitled to claim proforma credit/ modvat credit. However, no record on credit entitlement was produced. The Supreme court held that the assessee failed to prove its bonafides. Relevant paragraphs of this judgment are below. 24. We do not find any merit in these submissions. As stated above, the adjudication in this case was confined to the question of excisability and concealment of the existence of two ....
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.... 26. On the applicability of the Notification No. 121/94, dated 11-8-1994, the tribunal remanded the case back to the commissioner for re-examination of the limited question of its applicability. The tribunal also directed the commissioner to reconsider the quantum of penalty, fine etc. in the light of its findings on the applicability of the said notification. We do not wish to express any opinion on the applicability of the notification dated 11-8-1994. Suffice it to state, that, on the issue of excisability and clandestine manufacture and removal of the compound (kimam) from the two unlicensed/unregistered units at 96, Okhla Industrial Estate, Phase-III, New Delhi/E-1, Maharani Bagh, New Delhi, we do not find any infirmity in the impugned judgment. 27. Accordingly, these civil appeals filed by the assessees are dismissed with no order as to costs. 12. In the case of IFB Industries Ltd., the appellant was transferring goods at a lower value to its own sister concern in Bhopal and never disclosed such invoices to the Revenue. It's plea that whatever duty it paid would be available to its sister unit in Bhopal and hence it was a revenue neutral situation and the....
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....ly to them as to others. No more and no less. To demand duty within the normal period of limitation, nothing needs to be proved other than that the service was taxable at a specific rate during the period. The extended period of limitation, however, can be invoked only if the factors viz., (a) fraud; or (b) collusion; or (c) wilful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of the chapter or the rules with an intent to evade payment of duty were present. Since the Show Cause Notice is issued by the Revenue and it is for the Revenue to prove the existence of any of these elements. Evidently, each of these factors, such as fraud, collusion, suppression of facts, require also an intention to evade. It is a well settled legal position that suppression is not mere omission (which could also be careless or negligent) but a positive act of suppression. The qualifying clause makes it abundantly clear that there must be an intent to evade payment of duty. The existence of such an intent can only be inferred from the facts of every case. 15. It is in this context, the background of the assessee may also assume significance. We find it signifi....