M/S Aqua Master Clean vs Cst Ahmedabad

Appeal No.ST/11008,11009/2014 [Arising out of OIA-AHM-SVTAX-000-APP-336-337-13-14, dt.31.01.2014, passed by Commissioner (Appeals), Central Excise & Customs, Ahmedabad]

M/s Aqua Master Clean Appellant

Vs

CST Ahmedabad Respondent

Represented by:

For Appellant: Shri Vipul Khandhar, Chartered Accountant For Respondent: Shri T.K. Sikdar, Authorised Representative

For approval and signature:

Honble Mr. H.K. Thakur, Member (Technical)

1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy of Seen the order?

4. Whether order is to be circulated to the Departmental Yes authorities?

CORAM:

HONBLE MR. H.K. THAKUR, MEMBER (TECHNICAL)

Date of Hearing/Decision:21.07.2015

Order No.A/ 11048-11049/2015 dt.21.07.2015

Per: H.K. Thakur

These appeals have been filed by the Appellant with respect to OIA No. AHM-SVTAX-000-APP-336-337-13-14, dt.31.01.2014.

2. Shri Vipul Khandhar, learned Chartered Accountant appearing on behalf of the Appellant argued that the Appellant is engaged in providing Cleaning services as defined under Section 65(24)(b) of Finance Act, 1994 to various clients. That an enquiry was initiated against the Appellant by Department and Appellant was required to pay Service Tax from 2006-2008 to 2011-2012. That for the period before 2010-2011, when Appellant was not registered, there was huge liability of past dues, which was paid by the Appellant from the current receipts from the service recipients. That for the year 2010-2011 and 2011-2012, inspite of Service Tax being recovered from the customers, Appellant could not pay the Service Tax because the revenue generated in these financial years was utilized for making Service Tax liability of the earlier years. That the entire amount of Service Tax alongwith interest was paid by the Appellant by the time the present appeals were filed. It was the case of the learned Chartered Accountant that the Appellant is not contesting the Service Tax liability alongwith interest but are claiming waiver of penalty under Section 80 of Finance Act, 1994 as there was financial hardship. He also produced certain letters issued by Income Tax Department indicating that payments from their clients were directly taken by the Income Tax Department as they were not able to pay the income tax dues.

3. Shri T.K. Sikdar, learned Authorised Representative appearing on behalf of the Revenue argued that for the Financial Year 2010-2011 and 2011-2012, Appellant was recovering Service Tax also from his clients but the same was not being paid to the Department. It was, thus, strongly argued by the learned Authorised Representative that there was no reasonable cause for extending the benefit of Section 80 and accordingly defended the order passed by the lower authorities.

4. Heard both the sides and perused the case records. Appellant is not contesting the Service Tax liability and has paid the same alongwith interest. It is observed from Para 10.1 of the OIA dt.31.01.2014 passed by the First Appellate Authority that Appellant has not paid the entire amount of Service Tax alongwith interest before the issue of show cause notice. However, it is further observed that the entire amount alongwith interest was paid by the Appellant before filing of these appeals. Appellant is only contesting waiver of penalty under Section 76 & 77 of Finance Act, 1994 on the ground that there was financial hardship due to huge past liabilities paid by the Appellant. As per Para 4 of the show cause notice dt.16.10.2012, no penalty was proposed against the Appellant under Section 78 of Finance Act, 1994, which means that the element of intention to evade payment of duty and extended period was not invoked by the Department. Appellant paid the Service Tax liability from 2006-2007 to 2009-2010. The amount of Service Tax required to be paid for this period was more than Rs.1 Crore. There is weight in the argument of the Appellant that due to payment of earlier dues, there was a financial difficulty in making the payment when the amounts received from the client for the year 2010-2011 and 2011-2012 were used for making the payments for the earlier Service Tax dues. The learned Chartered Accountant also brought to the notice of the Bench certain letters issued by the tax recovery officers of the Income Tax Department written directly to the clients of the Appellant that amounts due to M/s Aqua Master Clean should be directly paid to the Income Tax Department. Though these letters were issued after the period involved in these demands, but it gives an indication that there was a financial hardship on the part of the Appellant for not discharging the duty liability for the year 2010-2011 to 2011-2012 in time. Accordingly, it is held that there was a reasonable cause and the case of the Appellant is covered by the provisions of Section 80 of Finance Act, 1994. Appeals filed by the Appellant are allowed.

(Dictated and pronounced in Court)

(H.K. Thakur) Member (Technical)

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