Big Bags International Pvt Ltd vs Commissioner Of Service Tax ...

ST/Stay/21679/2014, ST/Stay/21678/2014 in ST/21511/2014-SM, ST/21512/2014-SM

Appeal(s) Involved:

ST/21511/2014-SM, ST/21512/2014-SM

[Arising out of Order-In-Appeal No.222-2014 dated 14/03/2014 passed by CCE(Appeals) , BANGALORE-II ]

[Arising out of Order-In-Appeal No.223-2014 dated 14/03/2014 passed by CCE(Appeals) , BANGALORE-II ]

For approval and signature: HONBLE MRS. ARCHANA WADHWA, JUDICIAL MEMBER

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether Their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

Big Bags International Pvt Ltd No-61,nadakerappa Industrial Estate, Hegganahalli, Viswaneedam Post BANGALORE - 560091 KARNATAKA Appellant(s)

Versus

Commissioner of Service Tax Bangalore-service Tax 1ST TO 5TH FLOOR, TTMC BUILDING,above BMTC BUS STAND,DOMLUR BANGALORE, - 560071 KARNATAKA Respondent(s)

Appearance:

Shri B.N GURURAJ, Advocate 22.2, 3 RD MAIN ROAD CHAMARAJ PET, BANGALORE , KARNATAKA BANGALORE -

KARNATAKA For the Appellant Shri Mohd. Yusuf, Addl. Commissioner(AR) For the Respondent

Date of Hearing: 02/01/2015

Date of Decision: 02/01/2015

CORAM:

HONBLE MRS. ARCHANA WADHWA, JUDICIAL MEMBER

Final Order No. 20006-20007 / 2015

Per : ARCHANA WADHWA

The appellants were required to discharge their service tax liability in respect of value of sales commission paid to overseas agents, on reverse charge basis. However, they did not do so, even when they were registered with the Service Tax Department and were discharging their service tax liabilities in respect of other services, on reverse charge basis itself. As a result of investigations conducted by the Revenue, it came to notice that the service tax for the period from 2007-08 to 2011-12 was not discharged by them in respect of the sales commission paid to overseas agents.

2. In view of the above, the appellant admitted their liability and immediately paid service tax to the extent of Rs.2,81,349/- and of Rs.88,665/- along with interest.

3. Thereafter proceedings were initiated against them for imposition of penalties under the provisions of Sections 77 and 78 of the Finance Act, 1994, resulting in passing of the present impugned orders.

4. The appellants contention is that the service tax on the said services was not paid by them inadvertently and there was no element of suppression, misstatement or fraud etc. so as to attract the provisions of Section 78. Learned advocate further submits that as the appellants have immediately deposited the service tax along with interest, before the issuance of the show-cause notice, they should not have been served with any show-cause notice for imposition of penalties.

5. Learned AR appearing for the Revenue draws my attention to the provisions of Section 73(4) of the Finance Act laying down that in case service tax is not deposited on account of fraud, mis-statement or suppression, the provisions of Section 73(3) would not be applicable. He further submits that the appellant was registered with the Service Tax Department and was discharging his service tax liability in respect of other services, on reverse charge basis. As such, he was very much aware of his liability to pay the tax, even then he did not pay the requisite tax on the commission paid to foreign agents. The said fact of non-payment has come to the notice of the Revenue only upon investigations made by them. As such, he submits that it is a fit case for imposition of penalty.

6. After appreciating the submissions made by both the sides, I agree with the contention made by the learned AR. No plausible reason or explanation stands submitted by the appellant for non-payment of service tax in respect of the services in question. When the appellant was registered with the Department and was aware of his liabilities and was also paying service tax in respect of other services, the non-payment of service tax in respect of the present disputed services can only be a clear mala fide on his part. The fact of non-payment has, admittedly, come to surface on account of investigations conducted by the Revenue. As such, the deposit of service tax along with interest, subsequent to the investigations made by the Revenue, cannot be said to be covered by the provisions of Section 73(3) of the Finance Act inasmuch as the same cannot be held to be a voluntary payment. An assessee is compelled to accept and deposit the tax liabilities after it has come to the notice of the Revenue on account of investigations conducted by them. Such a course of action adopted by the appellant cannot save him from the penalty provisions.

7. In view of the above, I hold that the appellant is admittedly liable to penalty. However, as they have deposited the service tax along with interest prior to issuance of the show-cause notice, I reduce the penalty amount to 25% of the tax. Learned advocate undertakes to deposit the same within a period of 30(thirty) days from today, in which case, the same would get reduced to 25% of the penalty. Stay petition as also appeal get disposed of in above manner.

(Order pronounced and dictated in open court)

ARCHANA WADHWA JUDICIAL MEMBER

Raja

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