Lion Securities Services vs Commissioner Of Service Tax ...

[Arising out of Order-in-Appeal No. 343-2011 dated 06/05/2011 passed by CCE(Appeals-II), 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? Yes 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

LION SECURITIES SERVICES B.K, CHARITABLE BUILDING 1ST FLOOR, 1ST CROSS, II MAIN, CHAMARAJPET, BANGALORE 560 018 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:

Shri PRADYUMNA G.H., Advocate NO. 244, 1ST CROSS, Banashankari 3rd Stage, 2nd Block BANGALORE - 560085 KARNATAKA For the Appellant

Shri R. Gurunathan, Addl. 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. 21340 / 2015

Per : B.S.V.MURTHY

The original adjudicating authority adjudicated the show-cause notice issued on 10/11/2005 vide OIO No.21/07/2006. He took note of the fact that the appellant had not replied to the show-cause notice and did not appear for personal hearing offered by him on 17/07/2006 and 18/07/2006 and proceeded to confirm the demand for unspecified service tax amount with interest thereon and also imposed penalties under various Sections of Finance Act, 1994. This order was challenged by the appellants and the order passed by learned Commissioner(Appeals) is not on record before me.

2. Apparently the Commissioner(Appeals) remanded the matter to the original adjudicating authority who passed another order on 18/07/2008. Since the findings are very short and it is very relevant for future discussion, the same are reproduced below:-

I have carefully gone through the records of the case and the submission made by the assessee at the time of personal hearing. A case was registered against the assessee as he had not filed the ST-3 returns from Oct'2003. As the Show Cause Notice was issued during Nov'2005 it has to be construed that the demand is for the period from Oct'2003 to Sept'2005. The assessee while submitting the papers to the Commissioner (Appeals) in the appeal filed by them against the Order in Original No. 122/2006 dt.21.7.2006 had enclosed a copy of the appeal to this office also. On verification of the said papers it is seen that the assessee has filed the ST-3 returns as detailed below:

SI.

No. Period of ST-3 returns Amount of tax paid Date of filing the return

1.

Oct'2003 to March'2004 Data not available Details not submitted

2. April'2004 to Sept'2004 2,11,120//-

1.2.2006

3. Oct'2004 to March'2005 2,95,325/-

1.2.2006

4. April'2005 to Sept'2005 1,90,279/-

22.5.2006

In respect of period Oct'2003 to March'2004, the Assistant Commissioner of Central Excise, Service Tax Division, Bangalore III Commissionerate vide OIO No.43/2004 dt.18.8.2004 has passed an order covering the period from 1998 -99 to 2003-04 (upto 31.3.2004) and has confirmed an amount of Rs. 17,78,060/- which has been paid by the assessee. Therefore I am not going ahead in adjudicating the amount pertaining to that period as it would amount to issue of two OIOs for the same period. In respect of the balance period to be demanded from the assessee I am to conclude that the assessee has paid the amount and has also filed the return though belatedly. The assessee has himself quantified and paid the amount and has also filed the return, as the SCN was issued for the non filing of the return, I conclude that the amount quantified by the assessee is correct. Further as the assessee has delayed payment of the tax and has filed the ST 3 returns late he is liable for penalty under the provisions of Section 76, 77 & 78 of the Finance Act, 1994.

3. This order was challenged by the appellants before the learned Commissioner(Appeals) who vide his order dt. 26/10/2009, rejected the appeal for failure to deposit the amount of penalty as directed by him. Even on merits, he held that penalty is sustainable.

4. This order was challenged and the Tribunal vide Final Order No.172/2011 dt. 25/02/2011 remanded the matter to the Commissioner(Appeals) to deal with the assessees penal liability properly and pass a speaking order.

5. Consequent to this direction, the impugned order dt. 06/05/2011 has been passed. The Commissioner(Appeals) has once again upheld the OIO No.71/2008 dt. 18/07/2008. In this order, original adjudicating authority has imposed penalties under Sections 76, 77 and 78 of Finance Act, 1994. The finding portion has been reproduced already.

6. The learned advocate would submit that in this case, the show-cause notice did not specify the amount of tax payable at all and therefore the original adjudicating authority could not have confirmed the demand for any amount or appropriate any amount. He also submits that penalties under Sections 76 & 78 could not have been imposed at all in view of the observations of the original adjudicating authority himself that the assessee has paid the amount and also filed the return belatedly. He also observed that assessee has himself had quantified the amount and filed the returns. In view of the specific finding by the original adjudicating authority that show-cause notice was issued for non-filing of the return, penalty could not have been imposed on the appellant under Section 76 & 78.

7. Learned AR would submit that the returns were filed only much after the issue of the show-cause notice. He draws my attention to the table in the finding and submits that returns were filed on 01/02/2006 and 22/05/2006. He submits that in the absence of returns being filed, in the show-cause notice amount could not be specified, and therefore the confirmation of demand for unspecified amount and imposition of penalty is in order. When the returns were filed belatedly, the Department could not have been aware of the services rendered by the appellant and non-payment of service tax on the same. Therefore the suppression has been correctly invoked. Nevertheless in view of the fact that returns were filed belatedly, the penalty under Section 76 is sustainable. Both sides could not indicate the dates on which the service tax was paid, whether it is after the issue of show-cause notice or before is therefore not known.

8. I have considered the submissions made by both the sides. It is strange that while issuing show-cause notice on 10/11/2005, the Departmental officers did not even know that proceedings have already been initiated for the period October 2003 to March 2004 and this was part of the period for which demand was confirmed from 1998-99 onwards. This was verified and found out at the time of passing of order dt. 18/07/2008 by the original authority. For a period of almost 3 years, the fact that there was another proceeding for same period and there cannot have been any repetition of the demand for the same period was not known or brought to the notice of the Department also. In fact from the OIO it emerges that the original adjudicating authority got the copy of the OIO dt. 18/08/2004 since no details were forthcoming. The show-cause notice simply stated that October 2003 onwards, the appellant had not filed the returns at all. more over the show-cause notice did not even specify the amount payable by the appellant. According to provisions of Section 73(1) of Finance Act, 1994, whenever any service tax has not been paid or short paid, a notice has to be issued requiring the assessee to show-cause as to why he should not pay the amount specified in the notice.

What is clear from the show-cause notice is that the show-cause notice speaks of non-filing of return from October 2003 and does not specify any amount to be paid by the assessee. It is a statutory requirement that amount to be paid has to be indicated in the show-cause notice and in the adjudication proceedings, the adjudicating authority is required to determine the amount payable as per the provisions of Section 73(2) of Finance Act, 1994. Therefore I find that the submission of learned counsel that confirmation of the demand or confirmation of the amount paid and appropriation thereto is totally incorrect and not valid is correct. Once there is no amount specified in the show-cause notice, as submitted by the learned counsel, the only action available at this stage is to treat the show-cause notice as having been issued only for the purpose of not filing the returns. Therefore as submitted by the learned counsel, the confirmation of demand, appropriation of the amount paid towards demand and interest and penalties under Section 76 and 78 of Finance Act, 1994 cannot be sustained. The only penalty that can be sustained is the amount of Rs.3000/- imposed under Section 77 for non-submission of the returns.

9. In view of the above discussion, the penalty of Rs.3000/- (Rupees three thousand only) on the appellant under Section 77 of Finance Act, 1994 is upheld. The amount paid towards service tax and the interest are confirmed as not contested. Penalties under Sections 76 & 78 of Finance Act, 1994 imposed are set aside. Appeal is decided in above terms.

(Order pronounced and dictated in open court)

B.S.V.MURTHY TECHNICAL MEMBER Raja.

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