First Flight Couriers Ltd vs Commissioner Of Service Tax

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

COURT No. I

Appln.No.ST/MA(Ors)98677/14 APPEAL No.ST/15/08

(Arising out of Order-in-Original No.14/STC/SJS/07-08 dated 22/10/2007 passed by Commissioner of Service Tax, Mumbai)

For approval and signature:

Honble Mr.M.V. Ravindran, Member (Judicial) Honble Mr. P.R. Chandrasekharan, Member (Technical)

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? ========================================

First Flight Couriers Ltd., Appellant Vs. Commissioner of Service Tax, Respondent Mumbai

Appearance: Shri.Jaint R Shah, CA for appellant Shri.D.Nagvenkar, Addl. Comm. (AR), for respondent

CORAM: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. P.R.Chandrasekharan, Member (Technical)

Date of Hearing : 07/01/2015 Date of Decision : 07/01/2015 ORDER NO

Per: M.V. Ravindran

1. The miscellaneous application and appeal was called. The miscellaneous application filed by the appellant is for urging additional grounds of appeal, which were not taken in the grounds of appeal when the appeal was filed.

2. After hearing both the sides, we find that the grounds which are sought to be taken now are in continuation of appeal and urged in the reply to the show-cause notice and/or of legal nature. Accordingly, we allow the application for urging additions grounds of appeal.

3. The appeal is directed against order-in-original No.14/STC/SJS/07-08 dated 22/10/2007.

4. Heard both the sides and perused the records.

5. The issue in brief is regarding the recovery of service tax during the period April 2004 to August 2004 which was indicated as short payment of duty.

6. The officers of DGCEI visited the various premises of the appellant and after detailed investigation and recording of statements, it was noticed that approximately an amount of Rs.1.97 crore was short paid for the period April 2004 to August 2004 in respect of appellants twenty four branches. It is also on record that the appellant discharged the said service tax liability and the interest thereof on or before 20/11/2004. A show-cause notice was issued for appropriation of the amount of service tax paid and also for imposition of penalties and demand and appropriation of interest. The appellant did not context the service tax liability but contested provisions for imposition of penalty on them, before the adjudicating authority on the ground that they had discharged the entire tax liability and interest thereof before the issuance of show-cause notice. The adjudicating authority after following the due process of law confirmed the demand raised and appropriated the amount already deposited. He also appropriated the amount deposited by the appellant towards interest and imposed penalties under Section 76 & 78 of the Finance Act, 1994.

7. Learned Chartered Accountant after taking us through the entire case records would bring to our notice that the appellant had discharged the entire service tax liability much before the issuance of the show-cause notice. He would then draw our attention to the provisions of Section 73 (3) of the Finance Act, 1994 and urged that the said section provides for non-issuance of any show-cause notice when service tax liability is paid in full with interest. He would also submit that the show-cause notice are issued only to ten of their branches and fourteen branches did not receive any show-cause notice. After explaining the functioning of the appellant he would submit that there is only short payment of duty and there is no allegation that there was no non-payment of tax with intention to do so and there was no malafide or suppression of fact. He would rely upon the following decisions:

i) Auto Transport Services Vs. CCE, Jaipur  2006 (3) STR 330 (Tri-Del)

ii) Nischint Engineering Consultants Pvt. Ltd. Vs. CCE, Ahmedabad  2010 (19) STR 276 (Tri-Ahmd)

iii) Sands Hotel Pvt. Ltd., Vs. CST  2009 (16) STR 329 (Tri-Mum)

iv) Metal Forgings Vs. UOI  2002 (146) ELT 241 (SC)

8. The learned departmental representative on the other hand would submit that the appellant had not discharged any service tax liability during the relevant period in question and has paid the same after being investigated by the DGCEI authorities. He would draw our attention to the various statements given by the personnel of the appellant and submits that there was an escapement of tax in twenty four branches of the appellant. He would submit that penalties imposed on the appellant are correct and same should be retained.

9. On consideration of the submissions made by both the sides and also on perusal of the records, it is noted that the appellant is not contesting the confirmation of the service tax liability and the interest thereof. Appellant is contesting the penalties imposed under Section 76 & 78 of the Finance Act, 1994.

10. The adjudicating authority while imposing penalties on the appellant has come to the conclusion that the appellant had deliberately failed to deposit the service tax to the credit of Government of India. Mere perusal of the annexure to the show-cause notice would indicate that the appellant had been alleged to have short paid the service tax for the material period and in our view may be due to some calculation error. There is no allegation in the show-cause notice that during the material period, twenty four branches of the appellant had not discharged any service tax liability; on the contrary, the show-cause notices indicate that there was short payment of service tax liability. Be that as it may, we find that the findings recorded by the adjudicating authority for imposition of penalties is on ground that as a the deterrent measure to defeat the recurrence of breach of law and also to discourage non-compliance of law. On perusal of the entire records, we find that there is no such allegation on the appellant and the escapement of tax as alleged seems to be short paid due to some mis-calculation. We also find strong force in the contention raised by the representative of appellant that DGCEI which investigated the matter, did not come out with any short payment of service tax prior to April 2004. It was his submission that once in a year, the appellant themselves reconcile the statements and discharge the differential service tax liability short paid therein along with interest.

11. In our considered view that the provisions of Section 73 (3) of the Finance Act, would be applicable in the facts and circumstances of this case. The said section provides for discharge of service tax by an assessee on his own assessment thereof or on the basis of tax ascertained by the Central Excise Officer, discharge of service tax liability along with interest and inform the jurisdictional Assistant Commissioner of Central Excise, as the case may be the Deputy Commissioner of Central Excise of such payment in writing, no show-cause notice be issued to the assessee under sub-section (1) of the Section 73 of the Finance Act, 1994. In the case in hand, we do find the appellant had informed the concerned Central Excise officers as discharge of service tax liability as to ascertained and brought to their notice by them during the investigation.

12. We also find that this is a fit case for invoking the provisions of Section 80 of the Finance Act, 1994 for setting aside the penalties imposed on the appellant herein. We find that the explanation given by the appellants CA indicate that there is a reasonable cause for short payment of tax which was made good before the issuance of show-cause notice. In the facts and circumstances of this case, we set aside the penalties imposed on the appellant and allow the appeal.

13. Appeal is allowed as indicated herein above.

(Pronounced in Court)

(P.R. Chandrasekharan) Member (Technical) (M.V. Ravindran) Member (Judicial)

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