Commissioner Of Central Excise, ... vs Sri Sandeep Anandrao Magdum

(Arising out of Order-in-Appeal No. PUN-EXCUS-002-APP-104-13-14 21.10.2013 passed by the Commissioner of Central Excise (Appeals), Pune-II).

For approval and signature:

Honble Shri Anil Choudhary, Member (Judicial)

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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 : Yes 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, Kolhapur Appellant

Vs.

Sri Sandeep Anandrao Magdum Respondent

Appearance: Shri S.V. Nair, AC (AR) for Appellant

Shri M.A. Nyalkalkar, Advocate for Respondent

CORAM: SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL)

Date of Hearing: 08.05.2015

Date of Decision: 08.05.2015

ORDER NO.

Per: Shri Anil Choudhary

The Revenue is in appeal against order of the Commissioner (Appeals) whereby the penalty imposed under Section 78 has been set aside.

2. The brief facts are that the respondent assessee is a proprietorship concern engaged in providing the services under the category of Works Contract Service and registered w.e.f. 1.10.2008. For the period April, 2010 to March, 2011, a show-cause notice dated 1.3.2012 was issued as the Revenue felt that the assessee is failed to pay the due Service Tax and have also failed to file ST-3 returns. During the course of enquiry, the assessee had made available copy of Balance-sheet, Party Ledger abstracts, Service Tax liability worksheet etc. It was also noticed that the main nature of work of the assessee is supply of man-powers for various day to day works at the factory site of JSW Energy, Jaigad. The assessee was also providing the construction work as well as road construction work. From the worksheet of Service Tax as filed by the assessee, it was noticed that the assessee have charged and recovered Service Tax at the applicable rate, i.e. when the assessee have done work of providing only labour, they have charged and recovered Service Tax @ 10.30% and whey they have undertaken the construction work with material supply from their client.

Service Tax has been paid after availing 67% abatement. Further, from the scrutiny of the ST-3 returns for the relevant period and the GAR-7 challans, it was noticed that the assessee have filed ST-3 returns on 10.7.2011 for both the half year ending on 30th Sept. and 31st March for the financial year 2006-07. Further, the assessee had also paid late fee of Rs.2,000/- each for delayed filing of ST-3 returns. Further, the assessee also paid penalty @ 1% of the Service Tax per month of delayed deposit on 17.11.2011 in accordance with the provisions of Section 73(4A) of the Finance Act, 1994 and intimated to the Revenue requesting closure of the case and waiver of show-cause notice as provided. Further, in para 5, the amount of Service Tax, interest and penalty paid by the assessee have been specified in the Order-in-Original according to which, total Service Tax paid including cess to the tune of Rs.10,93,531/-. Further, an amount of interest is also being paid Rs.98,350/- and further penalty @ 1% for each month of delay has been paid totally Rs.75,519/-. The respondent assessee was required to show cause as to shy the application for waiver of show-cause notice under Section 73(4A0 should not be rejected and Service Tax amount of Rs.19,93,531/- be not demanded and appropriated from the amount already paid and further interest under Section 75 be not recovered and appropriated and further as to why penalty under Section 76 and 78 should not be imposed allowing adjustment of penalty of Rs.75,519/- already deposited under Section 73(4A).

The show-cause notice was adjudicated holding that there is no dispute about short payment of Service Tax liability and further observed that the assessee did not file returns on the respective due dates and the returns were filed subsequently after delay. Further, the assessee has deposited the total Service Tax of Rs.10,93,531/- including cess and interest and have also paid 1% penalty along with late fee for delay of deposit in returns. Accordingly, it was held that there is a clear case of non-payment/short payment of Service Tax and show-cause notice was confirmed confirming the proposed demand of tax and also appropriating the same along with interest which was also appropriated and further penalty of amount equal to tax i.e. Rs.10,93,531/- was imposed under Section 78 and penalty already paid under Section 73(4A) of Rs.75,519/- was appropriated.

2.1 Being aggrieved, the appellant preferred appeal before the Commissioner (Appeals), who vide the impugned order was pleased to allow the appeal recording the following findings: -

11. I find that the appellants have not contested their Service Tax liability and they are only contesting the penalty imposed under Section 78 of the Act. Accordingly the limited issue to be decided in this case is whether the appellants are liable to penalty under Section 78 of the Act and whether the benefit of Section 73(3) or Section 80 of the Act can be extended to the appellants?

12. I find that the Adjudicating Authority has given a clear finding in para 15 and 16 of the impugned Order-in-Original that the appellants have not filed the returns in time and they have also not paid the Service Tax amounts along with interest on due dates. Thus this is a case of delayed filing of returns and delayed payment of Service Tax and the same cannot be considered as a case of suppression of facts or intent to evade payment of Tax. Besides, the appellants have also paid full amount of Service Tax along with interest before issue of show-cause notice. They have also paid the late fees under Section 70 of the Act for delayed filing of returns and the same has been accepted by the Department and accordingly no penalty has been imposed under Section 77 of the Act. During the course of hearing the appellants had stated that they were under the bonafide belief that the tax is to be paid by JSW who had withheld the tax amount. I also find that the appellants are a small service provider and the proprietor of the appellants is not well educated and therefore not very well conversant with the tax procedures. Further, I also find that all the information was gathered by the department from the appellants records. In view of these facts suppression or intent to evade payment of Service Tax cannot be alleged and the same are not sustainable. Since the appellants have paid the Service Tax along with interest before the issue of show-cause notice and since it is not a case of fraud or suppression of facts etc. or contravention of the provisions of the Act or Rules with intent to evade payment of Service Tax, the appellants are entitled for the benefit of Section 73(3) of the Act. Therefore, there was no need to issue the show-cause notice in the first place and in consequence appellants were not liable to any penalty. This being the case the learned Adjudicating Authority is not being just, fair and legal in confirming the show-cause notice issued to the appellants and imposing the penalty under Section 78 of the Act.

13. In view of the foregoing the impugned Order-in-Original No. 14A/ADC/ST/KOP/2012 dated 14.09.2012 passed by the Additional Commissioner, Central Excise & Service Tax, Kolhapur Commissionerate, Kolhapur is annulled. The payment of Service Tax and the interest along with late fee for the delay in filing the returns is accepted. The appeal filed by the appellants allowed in above terms.

3. Being aggrieved, the Revenue is in appeal before this Tribunal on the ground that the Commissioner (Appeals) has erred in holding that there is no case of fraud, suppression of facts etc or contravention of the provisions of Act and Rules with an intent to evade payment of Service Tax and as such there was no need to issue notice to show cause and further holding that the assessee was not liable to penalty. It is further contended that the respondent assessee registered since 1.10.2008 and as such under the self assessment procedure, the onus was on the assessee to discharge the liability rest upon him under the statute. As the assessee was in spite of having all the required details/information on his records for assessing the tax liability, the assessee had not filed the ST-3 returns in time and paying the tax after some delay along with interest and 15 penalty amounts to violating the provisions of the Act and further amounts to suppression of facts. Accordingly, the Revenue prays for setting aside the impugned Order-in-Appeal and restoring the penalty imposed vide Order-in-Original.

4. The learned Counsel for the respondent assessee states that no case of any suppression or contumacious conduct has been made out against the appellant, not a singe rupee has been found to be not recorded in the Books of Account. Further, in the facts that the assessee have deposited the tax with interest and penalty under the provisions of Section 73(4A), no show cause was required to be issued is rightly held by the learned Commissioner (Appeals). Thus, there is no illegality and infirmity in the impugned order and as such the appeal is fit to be dismissed.

5. Having heard on rival contentions, it will be beneficial to take notice of Section 73(4A) of the Finance Act, 1994: -

{4A) Notwithstanding anything contained in 6[sub-section (4)], where during the course of any audit, investigation or verification, it is found that any service tax has not been levied or paid or has been short levied or short-paid or erroneously refunded, but the true and complete details of transactions are available in the specified records, the person chargeable to service tax or to whom erroneous refund has been made, may pay the service tax in full or in part, as he may accept to be the amount of tax chargeable or erroneously refunded along with interest payable thereon under section 75 and penalty equal to one per cent. of such tax, for each month, for the period during which the default continues, up to a maximum of twenty-five per cent. of the tax amount, before service of notice on him and inform the Central Excise Officer of such payment in writing, who, on receipt of such information, shall not serve any notice under subsection (1) in respect of the amount so paid and proceedings in respect of the said amount of service tax shall be deemed to have been concluded: Provided that the Central Excise Officer may determine the amount of service tax, if any, due from such person, which in his opinion remains to be paid by such person and shall proceed to recover such amount in the manner specified in sub-section (1).

5.1 I find that from plain reading, the Section provides that where true and complete details are available in the specified records which are admitted in the fact herein. Further, as required the assessee has deposited the amount of Service Tax in full as accepted by him, which is the same amount as determined vide the Order-in-Original and further admittedly the appellant have paid the interest under Section 75 as well as penalty equal to 1% of tax for each month for the period during the default was there and have also deposited penalty/late fee for delay in filing the returns. Further, it is found that no further tax is found to be recoverable from the respondent assessee. Accordingly, I find that the appellant is entitled to the benefit both under Section 73(3) as held by the learned Commissioner (Appeals) as well as also benefit under Section 73(4A) available in the provisions of the Finance Act, 1994.

6. Thus, the appeal is dismissed. The respondent assessee will be entitled to refund of the penalty already deposited with interest as per rules.

(Pronounced in Court)

(Anil Choudhary) Member (Judicial)

Sinha

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