TaxTMI 
TaxTMI 
2024 (2) TMI 1639
X X X X Extracts X X X X
X X X X Extracts X X X X
....e service tax amount of Rs. 13,34,797/- deposited by them against the outstanding demand of Rs15,50,970/- and the same shall be adjusted against the demanded amount. (ii) I order to charge and recover the interest at the rate as applicable from time to time in view of provisions under Section 75 of the Finance Act, 1994 on the said confirmed dues of Rs. 15,50,970/- (Rs Fifteen Lakhs, Fifty thousand, Nine Hundred and Seventy Only) from the party. Further 1 order for the appropriation of the total interest amount of Rs, 3,43,268/- deposited and the same shall be adjusted against the final accrued interest amount quantified after the deposit of balance service tax (iii) I further impose a total penalty Rs. 15,50,970/- (Rs Fifteen Lakhs, fifty thousand, Nine Hundred and Seventy Only) upon M/s Nextera Telecom Pvt Ltd B-84, Sector-60, Noida under Section 78 of the Finance Act, 1994 for the above contraventions. If the service tax as determined and the interest payable thereon is paid within thirty days of the date of communication of the order of the Central Excise officer who has determined such tax, the amount of penalty liable to be paid by the party shall be twenty ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on 78 of the finance Act, 1994 as amended as they have willfully and deliberately suppressed the facts of not paying due service tax and knowingly contravened the provisions of the Rule 6 of the Service Tax Rules, 1994 read with the Section 68 of the Finance Act, 1994. (iv) Late Fee amounting to Rs 1,80,000/- should not be demanded and recovered, in terms of the section 70 of the Finance Act, 1994 read with Rule 7C of the Service Tax Rules,1 994 for non-filing/ late filing of ST-3 Returns for the period from 2012-13 to 2015-16. 2.4 Show cause notice has been adjudicated as per the order in original referred in para 1 above. The appeal filed by the appellant before the First Appellate Authority has been dismissed as per the impugned order. 2.5 Aggrieved appellant has filed this appeal. 3.1 I have heard Ms Stuti Saga Advocate for the appellant and Shri Manish Raj Authorized representative for the revenue. 3.2 Arguing for the appellant learned counsel submits that: ⮚ There is no dispute about the fact that tax was payable by them; ⮚ The entire tax that was due from them was paid by them during the investigation itself. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e in appeal as well as during the course of hearing, hearing, and relevant provisions of the Act. I find that the appellant has satisfied the provisions of section 35F of the Central Excise Act, 1944 .I find that in the impugned Order, demand was confirmed by the adjudicating authority to the tune of Rs.15,50,970/- (Rs.12,50,728/-in respect of Services rendered +Rs.3,00,242/- in respect of Reverse Charge mechanism) and also ordered for appropriation of Rs.13,34,797/- already deposited (Rs.11,67,937/-towards service rendered -+Rs.1,66,860/- towards RCM).Thus there was short payment of Service tax liability amounting to Rs.2,16,173/- (Rs.82,791/- towards service rendered +Rs.1,33,382/- towards RCM). The appellant contended in the appeal that they had a Cenvat Credit balance of Rs.1,13,086/- in the Cenvat Credit ledger for the period 2012-13 to 2014-15 under investigation and also duly eligible to claim Cenvat Credit of Rs.1,66,860/- paid under reverse Charge mechanism and requested to allow the benefit of Cenvat Credit amounting to Rs.2,79,946/(Rs.1,13,086/-+Rs.1,66,860/-). 5.1 I observe that Rule 4(7) of Cenvat Credit Rules,2004 provides that 'The Cenvat Credit in respe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of which it can be ascertained whether the aforesaid Cenvat Credit, as claimed by the appellant, was in fact available to them or not. Accordingly, in absence of any supporting evidence, I do not find any strong reason to allow the benefit of Cenvat Credit, as claimed by the appellant lying during the period 2012-13 to 2014-15, for adjustment in the demand confirmed against the appellant. Further, the adjudicating authority confirmed the demand of Rs.3,00,242/-under Reverse Charge Mechanism and it is not disputed that the appellant had deposited only Rs.1,66,860/- towards their Service Tax liability under RCM, Hence,the appellant is liable to pay the balance Service Tax liability against the confirmed demand under RCM. Therefore, as discussed, I find that the contention of the appellant that they had deposited entire service tax is not sustainable. Accordingly, I hold the demand confirmed by the adjudicating authority. 6. I observe that the appellant have not assessed their Service Tax liability correctly as provided under Section 66 of the Finance Act, 1994 as well as not paid the service tax as provided under Section 68 of the Finance Act, 1994 read with Rule 6 of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 26AS for the FY 2013-14. Further, they submitted that their service tax liability was pending due to non-recovery from debtors. They further submitted that the company was trying to pay the outstanding service tax liability at the earliest and undertook to submit other information documents which were under compilation in due course of time. Subsequently, vide the office letter of C No 1435 dated 06/10/2016, the party was against requested to submit documents detailed therein so as to ascertain the service tax liability against the party. The party vide their letter dated 30/11/2016 submitted audited Financial Statement and Form 26AS for the Financial Year 2015. They also submitted details of the payments made by them in respect of liability for the financial year 2012-13 and 201314. They again reiterated that the liability of pending due to non-recovery of payments from their clients and undertook to pay the liability as soon as the payments were received. They also sought more time to submit the pending documents which could not be submitted due to shortage of time 6.3 Further, vide letter dated 27/07/2017, the party was asked to deposit the remaining outstanding servic....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....2016 to 12.8.2016 6.6 I observe that that the party has not disputed the fact that by the act of omission & commission they have failed to discharge their service tax liabilities on the services rendered by them during impugned period I find that w.e.f. 01.07.2012, the taxation of services shifted to negative list based taxation regime wherein 'service' has been defined under section 658(44) of the Finance Act, 1994 and under Section 668 of the Finance Act 1994, (as amended by the Finance Act, 2012), there shall be levied service tax at the rate of twelve percent on the value of all services, other than those services specified in the negative us provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed. The definition of 'service' a provided under Section 65B (44) is as follows. Service means any activity carried out by a person for another for consideration and includes a declared service, but shall not include a. an activity which constitutes merely, a. (i) a transfer of title in goods or immovable property, by way of sale, gift or h any other manner,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tutory obligation by not filing the ST3 returns. Further the party started the tax compliance when the case was taken up for the investigation by the Anti Evasion officers of the Noida Commissionerate. The party in their various correspondence had accepted their tax liabilities and subsequent payment of Rs.13,34,797/-, Service tax to the Government coffers achieved finality, dispelling any doubts regarding the taxability. The party's intent to completely pay their tax liabilities as soon as the fund is available with assessee' recorded in their written reply dated 14.12.2017 in response to the impugned SCN bears testimony to the fact of having accepted their tax liabilities. 6.7 I further take note of letter dated 03.01.2018 submitted during the course of recording of personal hearing on 03.01.2018, wherein they intimated the deposit of interest & penalty amount vide challan dated 27.12.2018 & 03.01.2018 as give in table below- S. No Challan No Date Interest Penalty Total Remarks 1 000534711112017- 00215 11-11- 2017 100,000/- 100,000/- Interest deposited towards late payment of 1 00534727122017- 00024 27.12.2017 100,00....
X X X X Extracts X X X X
X X X X Extracts X X X X
....st for the period by which such crediting of the tax or any part thereof is delayed" As already held that the party is liable to pay service tax in the foregoing paras. I find that the party is liable to pay interest. Also the party has given their intent clearly for complying with the statutory provision by depositing Rs.1 lakh as interest on 11.11.2017 before the date of the SCN i.e. 15.11.2017. Accordingly I hold that the interest, recoverable from them. Further, I find that the party has deposited interest amount of Rs. 3,43,268 detailed as below- Total Interest accrued Interest deposited by the party before the issuance of the SCN Interest deposited by the party after the issuance of SCN Interest pending deposit To be quantified on the complete payment of the Service Tax. Rs.1,43,268/- Rs.1,00,000/- on 11.11.17 Rs.1,00,000/- on 27.12.17 Total: Rs.2,00,000/- To be quantified. I hold that the interest as accrued demandable on late payment of service tax and the total interest amount of Rs.343268/- already deposited is being appropriated and shall be adjusted against the final accrued interest amount quantified after the deposit of balanc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ndicates the mala fide intention on the part of the party to evade Service Tax and the disregard to the fulfillment of the obligations as laid down under Finance Act/ Service Tax Rules,1994. As such, I do not find any force in the contention of the party that willful intent to suppression of facts cannot be construed in their case. Therefore, charge of willful mis-statement and suppression of facts trom the department regarding availing of wrong and excess amount of the CENVAT Credit stands established in the above case 9. Penalty Under The Section 78 of the said Act. 9.1 I find that the fact that the party having not paid the service tax came to the knowledge of the department only when the records/documents of the party were subject to detailed scrutiny during the course of the investigation by the anti- evasion. Further having held that the party had mens rea for suppression and misdeclaration, the demand has been correctly invoked under the proviso of the Section 73(1) of the Finance Act,1994, the penalty under section 78 of the Finance Act, 1994 naturally falls in place given the facts and circumstances of the case and thus imposable upon the party. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hapani Canteen Vs. CESTAT, Chennai [2015 (39) S.T.R. 386 (Mad.)] also relied upon the ratio of judgments of the apex court in the case of Union Of India Versus Dharamendra Textile Processors & Ors (2008 (231) ELT 3 (SC)) & Union of India Versus Rajasthan Spinning & Weaving Mils (2009(238) ELT 3(SC)) and held at Para 12 of the judgment "In the light of the law enunciated in the decisions referred supra, we hold that penalty is imposable even in cases where lax is paid before issuance of show cause notice. The first question of law is answered against the assessee and in favor of the department." 9.4 In view of the above I observe that in the instant case ingredients of suppression of facts, willful mis-statement, contravention of various provisions with intent to evade payment of central excise duty exist. Therefore, I find no reasonable cause not to impose penalty under the Section 78 of the Finance Act, 1994 and accordingly, I hold that penalty Section 78 of the Finance Act, 1994 is imposable upon the party 10 Penalty for late filing of Returns 10.1 I take a note that it is in records that the party did not file ST-3 returns as required under Section 70 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the departmental officers to determine in respect of the eligibility of the same vis a vis the CENVAT Credit Rules. Appellant had during the period in dispute not filed the ST-3 returns, but have filed them subsequently. They have not even claimed these amounts of credit in their ST-3 returns filed subsequently. 4.5 Rule 9 (9) and 9 (11) of the CENVAT Credit Rules, 2004 read as follows: "9. Documents and Accounts: (9) The provider of output service, availing CENVAT Credit, shall submit half-yearly return in form specified, by notification, by the Board to the Superintendent of Central Excise, by the end of month following the particular quarter or half year. (11) The provider of output service, availing CENVAT Credit referred to in sub-rule (9) or the input service distributor referred to in sub-rule (10), as the case may be, may submit a revised return to correct a mistake or omission within a period of sixty days from the date of submission of the return under sub rule (9) or sub rule (10),as the case may be." 4.6 Rule 14 of the CENVAT Credit Rules read as follows: "14. Recovery of CENVAT credit wrongly taken or erroneously refunded. - ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ertain thing in a certain way the thing must be done in that way or not at all. Other methods of performance are necessarily forbidden." 15. A three Judge Bench of this Court in a judgment reported as Chandra Kishore Jha v. Mahavir Prasad & Ors. [(1999) 8 SCC 266], held as under: "17....................It is a well-settled salutary principle that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner. (See with advantage: Nazir Ahmad v. King Emperor [(1935- 36) 63 IA 372 : AIR 1936 PC 253 (II)], Rao Shiv Bahadur Singh v. State of V.P. [AIR 1954 SC 322 : 1954 SCR 1098], State of U.P. v. Singhara Singh [AIR 1964 SC 358 : (1964) 1 SCWR 57] .) An election petition under the rules could only have been presented in the open court up to 16-5- 1995 till 4.15 p.m. (working hours of the Court) in the manner prescribed by Rule 6 (supra) either to the Judge or the Bench as the case may be to save the period of limitation. That, however, was not done................" 16. The said principle has been followed by this Court in Cherukuri Mani v. Chief Secretary, Government of Andhra Pradesh & Ors. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....truction is that, the intention of the legislation must be found in the words used by the legislature itself. The question is not what may be supposed and has been intended but what has been said." 4.9 Thus I do not find any merits in the submissions made by the appellant to this effect challenging the findings recorded by the Commissioner (Appeal) with regards to non availability of this credit for payment of due service tax. 4.10 Undisputedly appellant have admitted that they were not paying any service tax on the taxable services provided by them even though they had taken the registration and were also collecting the service tax from their clients/ customers. By not filing the returns as required under Service Tax Rules, 1994 they have suppressed the relevant fact of provision of taxable service from the revenue authorities with intent to evade payment of service tax. In my view for their act of suppression of information with intent to evade payment of tax, extended period of limitation under proviso to Section 73 (1) of the Finance Act, 1994 has been rightly invoked for making this demand from them. 4.11 As I uphold the demand of service tax made from the appellant t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... are quoting entire sub-section (1) of Section 11AB, which reads : "11AB. Interest on delayed payment of duty. - (1) where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, the person, who is liable to pay duty as determined under subsection (2), or has paid the duty under sub-section (2B) of Section 11A, shall in addition to duty be liable to pay interest at such rate, not below 10% ....from the first date of the month succeeding the month in which the duty ought to have been paid under this Act or from the date of such erroneous refund as the case may be, but for the provisions contained in sub-section (2) or sub-section (2B) of Section 11A, till the date of payment of such duty." Thus, why the clause "but for" is used, is evident from the tail piece of Section 11AB(1). Ordinarily, the interest is payable till payment of short duty as adjudicated, but in view of sub-section (2B), which gives liberty to the party to pay the short duty even before determination or without determination by the officer of Central Excise, the interest would stop to run to the extent of amount deposited by self ascertainment....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urther clear that in case the escape of duty is intentional and by reason of deception the main provision of sub section 2B will have no application. 16. The other provision with which we are concerned in this case is Section 11AC relating to penalty. It is as follows : [11AC. Penalty for short-levy or non-levy of duty in certain cases.- where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reasons of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section (2) of section 11A, shall also be liable to pay a penalty equal to the duty so determined : [Provided that where such duty as determined under subsection (2) of section 11A, and the interest payable thereon under section 11AB, is paid within thirty days from the date of communication of the order of the Central Excise Officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re, follows that if the notice under Section 11A(1) states that the escaped duty was the result of any conscious and deliberate wrong doing and in the order passed under Section 11A(2) there is a legally tenable finding to that effect then the provision of Section 11AC would also get attracted. The converse of this, equally true, is that in the absence of such an allegation in the notice the period for which the escaped duty may be reclaimed would be confined to one year and in the absence of such a finding in the order passed under Section 11A(2) there would be no application of the penalty provision in Section 11AC of the Act. On behalf of the assessees it was also submitted that Sections 11A and 11AC not only operate in different fields but the two provisions are also separated by time. The penalty provision of Section 11AC would come into play only after an order is passed under Section 11A(2) with the finding that the escaped duty was the result of deception by the assessee by adopting a means as indicated in Section 11AC. 19. From the aforesaid discussion it is clear that penalty under Section 11AC, as the word suggests, is punishment for an act of deliberate decepti....