Commissioner Of Central Excise vs Adiraj Manpower Services P. Ltd

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI

COURT No. I

Appeal No. ST/135/11

(Arising out of Order-in-Original No. PI/Commr/ST/11/2010 dated 30.11.2010 passed by Commissioner of Central Excise Pune)

For approval and signature:

Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. Raju, Member (Technical)

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1. Whether Press Reporters may be allowed to see : No 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 : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

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

4. Whether Order is to be circulated to the Departmental : Yes authorities?

Commissioner of Central Excise, Pune I Appellant Vs.

Adiraj Manpower Services P. Ltd. Respondent

Appearance:

Shri A.B. Kulgod, Asst. Commissioner (AR) for appellant None for respondent

CORAM:

Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. Raju, Member (Technical)

Date of Hearing: 14.07.2015 Date of Decision: 14.07.2015

ORDER NO

Per: M.V. Ravindran

This appeal is filed by Revenue against Order-in-Original No. PI/Commr/ST/11/2010 dated 30.11.2010.

2. Respondent is not represented. Since the issue involved in this case is in a narrow compass, we take up the appeal even in the absence of any representation from the respondent.

3. Revenue is aggrieved by the impugned order only on the ground that the adjudicating authority has dropped the proposition for imposing penalty under Section 78 of the Finance Act, 1994.

4. Learned D.R. appearing for Revenue submits that the respondent herein has not discharged the service tax liability despite informing them that they are supposed to do so; Commissioner has failed to appreciate the fact that the assess had collected the service tax but failed to deposit the same with the Government account due to financial crisis, cannot be a reason for non-discharge of service tax in time. It is his submission that the Honble Apex Court in the case of Rajasthan Spinning & Weaving Mills  2009 (238) ELT 3 (S.C.) wherein the Honble Supreme Court has laid a law whenever the provisions of sub-section are invoked penalty under Section 11AC with the ingredients are present is attracted.

5. On perusal of the records and on consideration of the detailed submission by learned D.R., we find that the Revenues appeal is devoid of merits.

5.1 Firstly we find that adjudicating authority in his order-in-original specifically in para 9 recorded as under, for setting aside the penalties imposed on the respondent:-

9.0. As already held, there is no dispute with regard to the computation of service tax raised in the show cause cum demand notice. Further the assessee has also paid the service tax due along with interest. Under the above circumstances, the only issue left in the instant case is that whether the assessee is liable for penalty under the various sections. Penalty under Section 78 could be imposed on any assessee when there is a deceit act in non-payment to the Govt. exchequer. But in the instant case non-payment was due to the reason that (i) the assessee has adopted wrong method for computing assessable value and (ii) full tax was not deposited due to the reason that some of his clients failed to make payments within the due dates. The contention of the assessee that some of his clients did not make payments immediately was not verified by the department. Further the assessee also has submitted that whenever there was a late payment, paid the tax along with the interest. Further, there is also no contrary forthcoming from the record that the assesse deceited the government by adopting any fraud or suppressing the fact from the department.

If the intention of the assessee is to fraud the government, he would not have shown the gross amount received from his clients in the returns filed by him. There is a clear admission in the show cause notice that the gross amount received from the clients is different from the amount shown in the returns. The SCN also admits that the assessee has adopted his own method in calculating the tax. But there is no allegation of any deceit method in adopting his own method. Therefore, the assessee due to ignorance did not take the correct assessable value. The assessee also submits that he did not have any person knowledgeable who can comply the provisions of the Finance Act, 1994. In view of the above facts on record the assessee can be given protection under Section 80 and accordingly I am extending the same and hence not liable for penalty under Section 78. In this regard, the various decisions relied upon by the assessee which are mentioned at para 8 (supra) also support. Further, the assessee is also not liable for penalty under Section 76 in as much as there was clear admission in the show cause notice that whenever there was late payment, the assessee always paid the payment along with interest.

In addition, the interest accrued due to late payment and wrong calculation of taxable value was also paid already. The intention of the government is to collect the due from the assessee within the due date and in case of any lathe payment, the payment has to be collected along with interest. Only in the case of suppression, fraud etc, the provision contained in Section 73 read with Section 78 would come into play. In the instant case, as discussed above, there is no fraud or suppression on part of the assessee. The moment, the short payment was quantified; the assessee without any hesitation worked out the difference and paid the same which act has to be appreciated by not imposing penalty. However, the assessee is liable for penalty under Section 70 since he has failed to file returns for the period from October, 2008 onwards.

9.01 The assessee has contested the computation of total demand of Rs (51, 45, 290/- + Rs 1, 72, 114/-- Rs 53, 17, 404/-). According to the assessee, the differential duty comes to Rs 9,480/-as against Rs 1, 72, 114/- which has been agreed to be paid along with interest by the assessee on receipt of the order. The difference was due to wrong adoption off assessable value over a period involved in the Show cause notice. The value, according to the assessee, was to be based on date wise actual receipt. Whereas the show cause notice adopted gross receipt without considering the actual receipt. I have gone through the Annexure and I found that computation adopted by assessee was correct as the same was based on actual receipt of consideration.

It can be seen from the above re-produced findings the adjudicating authority has confirmed that assessee has discharged the entire service tax liability with interest. On a specific query from the Bench it was informed by the department that the entire amount of service tax has been discharged before issue of show-cause notice. We find that, if it so, the provisions of Section 73(3) will apply in full force in this case.

5.2 Secondly, we find that invoking of Section 80 of Finance Act, was discretionary power used by adjudicating authority and recording reasonings for doing so. The appeal against the discretionary powers to set aside penalty is incorrect as the reasoning as recorded by the adjudicating authority are acceptable reason for invoking the provisions of Section 80 of the Finance Act, 1994.

6. In sum we find that the appeal needs to be rejected and uphold the impugned order to the extent it dropped the proceedings initiated for imposition of penalty under Section 78 of the Finance Act. Appeal is rejected.

(Dictated in Court)

(Raju) Member (Technical) (M.V. Ravindran) Member (Judicial)

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