G.V. Enterprises vs Commissioner Of Service Tax ...

[Arising out of Order-in-Appeal No. 340-2011 dated 06/05/2011 passed by CCE(Appeals), Bangalore]

For approval and signature: HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes

G.V. ENTERPRISES PLOT NO.17F, 2ND PHASE, PEENYA INDUSTRIA AREA, BANGALORE 560 058 Appellant(s)

Versus

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

Appearance:

Smt. Vijaya Prakash, Advocate G.SAMPATH & S. RAGHU 543,12TH CROSS,8TH MAIN J.P NAGARA 2ND PAHASE, BANGALORE - 560078 KARNATAKA For the Appellant

Shri Pakshi Rajan, Asst. Commissioner(AR) For the Respondent

Date of Hearing: 12/06/2015

Date of Decision: 12/06/2015

CORAM:

HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER

Final Order No. 21357 / 2015

Per : B.S.V.MURTHY

The appellant is engaged in the process of anodizing the aluminium frames sent to them by solar water heater manufacturers and other manufacturers. In respect of the job work undertaken for solar water heater manufacturers, the appellants were clearing the goods under their own invoices. In respect of other manufacturers, the job work challans were used since the manufacturers were eligible for CENVAT credit. Investigation was taken up in the month of June 2007 and the appellant admitted that they were liable to service tax and interest thereon and the service tax with interest was paid during the months of June 2007 to March 2008. Thereafter show-cause notice was issued on 27/05/2008 proposing to appropriate the amounts paid and imposing penalty. The original adjudicating authority invoked provisions of Section 80 of Finance Act, 1994 waived the penalty on the ground that the appellants appeared to have been confused about their liability. On an appeal filed by the Revenue, the Commissioner(Appeals) held that appellants were liable to penalty and accordingly imposed penalties under Sections 76, 77 & 78 of Finance Act, 1994. Hence the appeal.

2. Heard both the sides.

3. The learned counsel submits that the liability arose w.e.f. 16/06/2005 and the appellant being a proprietory firm, did not know the legal provisions and believed that all the products manufactured for harnessing solar energy are exempt and therefore they entertained a bona fide belief that they were not liable to service tax at all. She also submits that in respect of other goods, the appellants were doing job work and procedure prescribed for job work was being followed and hence no duty was to be paid. She submits that the moment the appellant came to now that the work undertaken by them is liable to service tax and there was no exemption in spite of the fact that the anodizing work was done for the manufacturers for the purpose of solar water heater, they discharged the liability. She submits that the decision of the original authority was proper and in order and no need to be interfered with. The learned AR would rely upon several decisions to submit that ignorance of law is not an excuse and it is the duty of every citizen to keep tract of the changes in law and discharge the liability as and when the same arises. There cannot be any confusion or lack of knowledge and such beliefs are only excuses made to avoid payment of taxes which are due to the exchequer.

4. I have considered the submissions made by both the sides. The question that is to be decided is whether there was reasonable cause for waiver of penalty or not. If there was no plea entertaining bona fide belief, naturally the question of taking a lenient view would not arise. It is the Government policy and generally, it is understood that in the case of wind energy and solar energy, generally tax is not imposed. Therefore in this case if the appellant entertained a bona fide belief that they were not liable to pay service tax on the job work undertaken for solar water heater manufacturers, they cannot be found fault with. Moreover once the legal position was pointed out, the appellant paid the tax without any delay. This shows that the appellant really did not know about the law and they had not even collected the tax and even then they discharged the liability with any question. Therefore, in my opinion, invocation of Section 80 by the original authority was in order. Unfortunately, the original authority did not discuss in detail about the aspects which convinced him to waive the penalty under Section 80 of Finance Act, 1994. In my opinion, having regard to the fact that appellant is a proprietory firm, undertaking a single activity of iodization and in view of the fact that for the Solar water heater, they were not following any procedure and raising invoice, I consider this is a fit case for waiver of penalty. Several decisions were cited by both the sides and I have not considered any of them since the facts are not comparable to any of those decisions. Accordingly I hold that the waiver of penalty by invoking provisions of Section 80 of Finance Act would be appropriate in this case and I do so.

5. In view of the above, the impugned order is set aside and appeal is allowed as far as penalties imposed under various Sections of Finance Act are concerned.

(Order pronounced and dictated in open court)

B.S.V.MURTHY TECHNICAL MEMBER Raja 5