M/S. Constro Plus vs Commissioner Of Central Excise & ...

[Arising out of Order-in- Appeal No. RPS/111/NSK/2012 dtd. 17/12/2012 passed by the Commissioner(Appeals) of Central Excise & Customs, Nasik]

For approval and signature:

Honble Mr Ramesh Nair, Member(Judicial)

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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 : 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? =======================================================

M/s. Constro Plus : Appellants

VS

Commissioner of Central Excise & Customs, Nashik : Respondent

Appearance

Shri. Bharat Raichandani, Advocate for the Appellants Shri. A.B. Kulgod, Asstt. Commissioner(A.R.) for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 18/6/2015 Date of decision: 18/6/2015

ORDER NO.

Per : Ramesh Nair

This appeal is directed against Order-in- Appeal No. RPS/111/NSK/2012 dtd. 17/12/2012 passed by the Commissioner(Appeals) of Central Excise & Customs, Nasik, wherein Ld. Commissioner(Appeals) upheld the order-in-original except reduction of part penalty.

2. The fact of the case is that the appellant is engaged in providing maintenance and repair service to M/s. Hindustan Aeronautics Ltd. which is Government of India undertaking, however they have not discharged service tax liability. Later on when the department has pointed out regarding the non payment of service tax the appellant admittedly paid the entire service tax interest and penalty of Rs. 24,000/- under Section 77. After show cause notice, case was adjudicated wherein service tax demand was confirmed and payment made by the appellant with interest have been appropriated. Aggrieved by the said order, the appellant filed appeal before the Commissioner(Appeals), who by impugned order reduced penalty under Section 77 from Rs. 1,80,000/- to 18,000/-. However penalty imposed under Section 78 and 76 were upheld. Appellant, aggrieved by the impugned order filed appeal challenging the impugned order. Ld. Counsel, Shri. Bharat Raichandani by taking instruction from the appellant made statement that appellant is not contesting the service tax, interest and penalty of Rs. 24,000/- already paid, their contest is only on penalties imposed under Section 76 and 78.

3. Ld Counsel submits that service tax demand is exclusively on the service provided to M/s. Hindustan Aeronautics Ltd. which is Government of India undertaking. Services were provided under a contract. As per contract there are no norms regarding the service tax therefore they were under bonafide belief that these services are not liable for service tax. He further submits that since services were provided to M/s. Hindustan Aeronautics Ltd., it cannot be with malafide intention. He submits that partner Shri. Shri. Mahesh Pawar in his statement before the investigating officer clearly explained the reason for non payment of service tax and not raised any objection and undertook to discharge service tax liability, therefore appellant has proved their bonafide in failure to make payment of service tax in time. He prayed that the penalty under Section 76 and 78 should be waived invoking Section 80 of the Finance Act, 1994. In support of his submission, he placed reliance on following judgments:

(a) Joy Construction Vs. Commissioner of C. Ex. Nagpur[2010(18) S.T.R. 769(Tri. Mumbai)]

(b) Prince Thermal India Pvt. Ltd. Vs. Commissioner of C. Ex. Nagpur [2013(30) S.T.R. 394(Tri. Mumbai)]

(c) Busy Bee Vs. Commissioner of C. Ex. Coimbatore[2007 (7) S.T.R. 195(Tri. Chennai)]

(d) Bajaj Travels Ltd. Vs. Commissioner of Service tax[2012(25) S.T.R. 417(Del.)]

4. Shri. A.B. Kulgod, Ld. Asstt. Commissioner(A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that penalty under Section 76 and 78 cannot be waived for the reason that the demand was raised and confirmed for the extended period. Once the extended period has been invoked then malafide intention is clearly proved accordingly Section 78 and 76 will unavoidably be invoked.

5. I have carefully considered the submissions made by both the sides and perused the record.

6. From the records, I find that the appellant is a partnership firm providing repair and maintenance services to M/s. Hindustan Aeronautics Ltd. which is Government undertaking company. The services have been provided under the legal contract and as per the contract there was no terms of service tax liability and the same was not pointed out by the service recipient i.e. Government of India undertaking. In view of this fact it is clear that in non payment of service tax there cannot be intension for evasion of service tax, particularly when recipient is Government of India undertaking. The partner, Shri. Mahesh Pawar of the appellant firm in his statement stated as under:

On being asked as to my business activity, I say that my main business is to provide services of commercial or industrial buildings and civil structure, repair and maintenance services to different clients which include M/s. HAL, M/s. MES. I am doing this business for the last 18 years. On being asked as to procedure of work of M/s. HAL & MES I state that I am doing the said work for HAL & MES since last 15 years. The work is allotted by HAL as well as MES through a tender. We submit the tender as & when it is called for by HAL and after a successful bidding, we get the contract on a works Contract basis. We are required to undertake each work on with material basis and we charge for the materials as well as the labour charges and other applicable overheads, as approved by HAL/MES. I have produced before you a summary of the works undertaken & completed by us during the last five years. I will produce a copy of tenders/works orders within a weeks time.

On being asked regarding payment of service tax, I state that I was not aware of service tax registration requirement and moreover, since it was not required by our clients, we did not apply for it prior to being made aware by way of letter dated 9/7/2010 received from your office only after receiving the letter I enquired around and came to know about service tax and its registration.

I am producing before you photocopies of my Income tax returns and balance sheets for the years 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 and 2009-10. We have not finalized out balance sheet for year 2009-10 and hence I will produce before youre the trial balance sheet for the same. I have produced before you the TDS Certificate (Form- 16-A) issued by the clients, which indicate the amounts paid to us and the TDS amounts. I shall produce photocopies of contracts entered into between my firms and M/s. HAL & MES within a weeks time.

Further I fully agree to pay the service tax which is unpaid and I shall pay the same with interest as may be applicable. I wish to inform you that due to financial crunch, I may please be given some more time to arrange for the funds for tax payment. I shall present myself before you at the specified date and time alongwith the documents/information as called for. I have nothing further to state at this time.

From the above statement, it is clear that appellant has explained the reason for failure to make service tax payment and without contest admittedly paid service tax and subsequently they discharged interest and penalty of Rs. 24,000/- under Section 77. I am therefore of the considered view that appellant have shown reasonable cause for non payment of service tax. Therefore in terms of Section 80 of the Finance Act, 1994, the appellant deserves waiver of penalty. I therefore waive the penalties imposed under Section 76 and 78. However the demand of service tax , interest and penalty of Rs. 24,000/- under Section 77 confirmed by the Commissioner(Appeals) stand upheld. Appeal is partly allowed in the above terms.

(Dictated in court)

Ramesh Nair Member (Judicial)

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