TaxTMI 
TaxTMI 
2009 (6) TMI 64
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.... penalty imposed without disputing tax liability arose under adjudication. Accordingly limited issue of penalty was pressed praying that penalties imposed under sections 76, 77 and 78 may be waived or in the alternative, penalty under section 76 may be waived in toto and penalty under section 78 may be reduced to a marginal amount in the interest of justice. Also, subsequent to hearing of the matter, learned counsel for the appellant filed written submissions on 24-2-2009, reiterating his stand on the above limited issue. In view of filing of written submission by the assessee, revenue was given equal opportunity to file their submissions if any. Accordingly, revenue also filed their submission on 9-4-2009. Both the appeals are accordingly considered taking written submission of both sides into consideration and decided together by this common order in view of analogous hearing granted for both the appeals to both sides. Appeal Case No. ST - 440/2006 2. The appellant being aggrieved by the impugned order of adjudication dated 12-6-2006 passed by learned Commissioner, Chandigarh relating to the period April, 2000 to March, 2005 against show-cause notice dated 20-10-2005 giving....
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....iness tie up. The appellant was booking ticket for its clients as well as agents who were not members of IATA, under Billing Settlement Plan (BSP) of IATA. Under this plan, the appellant was getting tickets on line from various tied up Air Lines. Fortnightly statement was received by the appellant under above. Plan showing various details like basic fare, transaction value, tax values and commission on tickets. Due to stiff competition in the market, the appellant was merely able to retain approximately 1 per cent of the commission earned by it parting with a part of commission to its customers and agents who are not members of IATA. 5. The appellant was under belief that 10 per cent of the 1 per cent net commission retained by it was service tax payable for the financial years 2000-01 to 2004-05 in both the appeals on the ground that the appellant was not aware of any other method of determination of its service tax liability. Returns filed by the appellant under the Act disclosed basic fare while its calculation of service tax was based on the net commission retained by it. Investigation and Consequence thereof 6. Consequent upon search to the premises of the appellant o....
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....0.5% 0.25% 15-5-2003 to 13-9-2004 0.8% 0.4% 13-9-2004 to 31-3-2005 1% 0.5% In addition to the service tax payable, Education Cess was payable at the rate of 2 per cent on the service tax with effect from 10-9-2004. Suppressed value of "basic fare" for the impugned period 1-4-2000 to 31-3-2005 relating Chandigarh jurisdiction was worked out as follows, which is subject-matter of Appeal Case No. 444/06: Domestic Tickets International Tickets Actual Value Rs.12,15,54,633 Rs.1,15,79,20,542 Declared Value Rs. 9,36,05,770 Rs. 33,16,01,816 Suppressed value Rs. 2,79,48,863 Rs. 82,63,18,726 Service Tax evaded Rs. 56,84,980 Similarly, for the self same period aforesaid, inference of investigation in respect of Delhi jurisdiction was that the appellant had suppressed "basic fare" as under, which is under Appeal Case No. 111/06: Domestic Tickets Actual Basic fare charged Rs.2,58,62,84,429 Basic fare shown in ST-3 Return Rs.1,30,77,36,056 Suppressed Basic Fare Rs.1,27,85,48,373 Service tax evaded Rs. 86,02,849 Adjudicatio....
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....11D of Central Excise Act, 1944 read with provisions of section 83 of the Act. Above finding against the appellant made it liable to penal consequence of law as well recovery of tax evaded. 11. The Authorities found the appellant not innocent. Deliberate manipulation of record and suppression of taxable service having been found and finding the appellant had realised service tax due from its customers, but not deliberately deposited the same under law, it was held by both the authorities that penalty under sections 76 and 78 of the Act was leviable. An additional liability of penalty under section 77 was imposed by the learned Adjudicating Authority of Delhi. Pleas of appellant before Tribunal 12. Learned Counsel Sri Anand appearing for the appellant in Appeal Case No. ST-444/2006 and 111/2006 argued as under as well as reiterated in his written note submitting that both the cases were made by revenue for similar reasons: (1) That the whole proceeding was initiated under misconception of law when there was confusion in respect of manner of levy of service tax. (2) The appellant from the beginning of search explained to the authorities that due to confusion and misund....
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....d on the net commission retained by them, because of the reason that they were not aware of the method of calculation of the service tax. (9) There was no intention to evade tax. But shortfall of tax paid is under bona fide mistake of law for which the interpretational error of law gives shelter to the appellant under section 80 of the Act and such reasonable cause absolves the appellant from rigours of penalty under sections 76, 77 and 78 of the Act. (10) Alternatively, in any event, penalty shall not exceed 25 per cent of the tax liability and the appellant finds support from the decision of Hon'ble High Court of Delhi in the case of K.P. Pouches (P.) Ltd v. Union of India 2008 (228) ELT 31. (11) There cannot be two penalties. One under section 76 and the other under section 78 of the Act which is also clear from the legislative mandate incorporating a provision in section 78 of the Finance Act, 1994. (12) There is no question of recovery of education cess of Rs. 64,029 in Appeal Case No. 111/2006 which has been erroneously made and this is subject to verification of record. (13) That in following cases, Tribunal has set aside penalty invoking section 80 of the....
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....ppellant Sri Mohinder Singh Bajaj in his recorded statement on 5-9-2005 stated that the company is depositing service tax on calculation of net commission retained by it but this figure on service tax return (ST-3) is different because of mistake in their calculation and misunderstanding of the calculation method. (4) That, Sri Kulwant Singh, Accountant in his statement recorded on 5-9-2005 stated that he is preparing accounts since last 13 years and prepares service tax return for the appellant which is calculated at the rate of 10 per cent of the commission / profit retained by the appellant company. (5) That, the appellant was paying service tax on the basis of commission retained by them while the service tax was to be paid on the basis of commission received from the airlines. On the other hand they were showing in their service tax returns payment of service tax on the basis of basic fare. (6) The appellant was not showing the correct figure of basic fare and to retain the service tax amount they were back calculating the basic fare from the tax amount already paid on the basis of commission retained by them. (7) That they were not reflecting the correct amount of....
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....he air travel agent and could not be changed during the financial year under any circumstances. 15.1 What has happened in this case is that throughout during the period of dispute, the appellant was actually paying the service tax at the prevailing rate under section 66 on the net commission instead of on the gross commission and that has resulted in short payment of tax. While doing so, in the ST-3 returns, instead of showing the gross and net commission and calculation of service tax on that basis, the tax payment shown was as if it was on the 'basic fare' basis at the rate appearing under rule 6(7) of the Rules. 'Basic fare' shown in the ST-3 returns was not the actual 'basic fare'. Those were much lower amount which were being determined by the back calculation so that the tax on the same at the rate mentioned in rule 6(7) matches the service tax paid by the appellant on the net commission at the normal rate. The difference between the basic fare declared and the actual basic fare on which the tax was to be paid at the rate prescribed under rule 6(7) was to the tune of about Rs. 213 crores in aggregate. Since in the ST-3 returns, the tax payment was b....
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....rishna Poduval [2006] 3 STT 96. It was held in that case that incidents of imposition of penalty under sections 76 and 78 are distinct and separate under two provisions and even if the offences are committed in the course of the same transaction or arise out of the same act, penalty would be imposable both under section 76 as well as section 78. In view of this, the penalty under section 76 is upheld. However, the same is reduced to Rs. 100 per day in Appeal No. ST/440/06. 17.1 As regards penalty under section 78, the same is attracted wherever any service tax has not been levied or paid or has been short levied or short paid or erroneously refunded by the reasons of fraud, suppression of facts, wilful mis-statement or contravention of any provisions of Finance Act, 1994 or of the Rules made thereunder with intent to evade the payment of service tax and this penalty shall not be less than the duty evaded but shall not exceed two times the amount of service tax evaded/refunded. However, as per the first and second proviso to section 78, where the service tax as determined under section 73(2) along with interest and penalty is paid within 30 days from the date of communication of ....