) Commissioner Of Central Excise vs ) Star Vision

[Arising out of Order-in-Appeal No.75/2005-ST dated 21.9.2005 passed by the Commissioner of Central Excise (Appeals), Coimbatore]

1) Commissioner of Central Excise, Coimbatore 2) Star Vision Appellant

Versus

1) Star Vision 2) Commissioner of Central Excise, Coimbatore Respondent

Versus

Appearance:

Shri L. Paneerselvam, AC (AR) For the Revenue Shri M. Karthikeyan, Advocate For the Assessee

CORAM:

Honble Shri R. Periasami, Technical Member

Date of hearing/decision :18.3.2015

FINAL ORDER No.40716-40717/2015

Both assessees appeal and Revenues appeals are taken up together as the issue arises out of common OIA. Appellant filed appeal contesting to set aside penalties imposed under Section 76 and 78 of the Finance Act, 1944 whereas the Revenue filed appeal for restoring Section 76 penalty.

2. The brief facts of the case are that appellant is registered under Service Tax as they are authorized distributor of Star India Pvt. Ltd. and ESPN and distributing the channels to the cable operators and received commissions from the channel operators. Adjudicating authority confirmed the service tax demand of Rs.4,99,795/ under Business Auxiliary Service and also appropriated the entire service tax already paid and imposed a penalty of Rs.3,14,200/- under Section 76 and also imposed penalty under Section 77 and Section 78. On appeal, the Commissioner (Appeals) upheld the demand and Section 77 & 78 penalties. However, he reduced the penalty imposed under Section 76 to Rs.75,000/-. Appellant filed appeal seeking to set aside Section 77 & 78 penalties by invoking Section 80 of the Finance Act. On the other hand, Revenue filed appeal against the reduction of penalty in the impugned order under Section 76.

3. The Ld. Advocate submits that the period of levy of service tax is for the period 1.7.2003 to 31.5.2004 when the service tax levy was newly introduced under BAS. Appellant are the sole distributor of channels to cable operators and in the beginning there was a confusion in the industry on the taxability as well as on payment of service tax. Immediately upon the officers visited the appellants premises on 30.3.2004, they promptly got the registration and paid entire service tax immediately even before issue of SCN. He further submits that they are the sole proprietor for distributor of the Star TV and ESPN channels and upon pointing out by the department, they immediately took up with channel operators for reimbursement of service tax amount whereas ESPN has refused for reimbursement and Star TV agreed to reimburse the amount. Immediately on 10.6.2004, they deposited entire service tax even though ESPN refused to reimburse the service tax. Therefore, they are eligible for waiver of penalty under Section 80 of the Finance Act. Non-payment of tax during a short period due to confusion on the taxability prevailed is justified. He relied on the following citations :-

(i) Commissioner Vs Jivanbhai D.Makwana 2010 (20) S.T.R 605 (Guj.)

(ii) CCE Madurai Vs Pandian Hotels Ltd. 2005 (180) ELT 458 (Tri.- Chennai)

(iii) CST Bangalore Vs Motor World 2012 (27) ELT STR 225 (Kar.)

(iv) Commissioner Vs Jivanbhai D. Makwana 2010 (20) ELT 605 (Guj.)

(v) Srilankan Airlines Vs CST Chennai 2013 (29) S.T.R. 365 (Tri.-Chennai)

(vi) P. Govindaraj Vs CCE Madurai 2014 (36) STR 400 (Tri.-Chennai)

4. On the other hand, Ld. A.R. reiterated the findings. He submits that the service tax levy was based on cum tax value which implies that appellants already collected the service tax. Since the provisions of levy was justified, appellants are liable for penalty under Section 77 & 78. The Commissioner (Appeals) has no discretion to reduce penalty imposed under Section 76.

5. After hearing both sides, the case relates to waiver of penalty imposed under Section 76 & 78 as well as Section 77 as the appellants have already paid the entire service tax before issue of SCN and immediately after it was pointed out by the department. The only question arises in this appeal is as to whether appellant is eligible for waiver of penalty imposed on them under Section 76, 77 and 78 of the under Section 80 of the Finance Act or otherwise. Revenues appeal is against Commissioner (Appeals) order reducing penalty under Section 76 and for restoring penalty as imposed by adjudicating authority. On perusal of the records and documents, I find that levy of service tax on the commissions received from the TV channel operators and relates to the period 1.7.2003 to 31.5.2004. The levy of tax under BAS came into effect w.e.f 1.7.2003 vide Notification No.7/2003-ST dt. 20.6.2003. I also find that appellant on being pointed out by department on the taxability under BAS, they paid the entire service tax in spite of the fact that one of the channel operators ESPN had refused for reimbursement of service tax. Considering the ambiguity prevailing on payment of service tax during the relevant period appellant's contention merits justification for bonafide cause for invoking Section 80. In this regard, on the very same issue, this Bench of the Tribunal has been consistently holding that penalty is not imposable in such cases and provisions of Section 80 of Finance Act, 1994 is invokable. One of such case is reported in the case of The Honble High Court in the case of CST Bangalore Vs Motor World (supra) has set aside the penalty under Section 76, 78 invoking section 80 of the Finance Act. By respectfully following Honble High Court decision (supra) and this Bench decision (supra), I hold that there is reasonable cause established in the present case for waiver of penalties. Accordingly, I set aside the penalties imposed under Section 76, 77 and 78. Assessee's appeal is allowed and Revenue appeal is rejected.

(Operative part of the order was pronounced in open court on 18.3.2015)

(R. PERIASAMI) TECHNICAL MEMBER

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