M/S Fortune Network Pvt Ltd vs Commissioners Of Central Excise

[ Arising out of OIA-PJ-619-VDR-II-2012-13 dtd 26/03/2013 Passed by Commissioners of Central Excise, Customs and Service Tax-VADODARA-II ]

M/s Fortune Network Pvt Ltd - Appellant(s)

Vs.

Commissioners of Central Excise, - Respondent(s) Customs and Service Tax-VADODARA-II

Represented by

For Assessee : Shri Dhaval Shah, Advocate For Revenue : Shri J Nair, Authorised Representative

For approval and signature :

Mr. H.K. Thakur, Hon.ble Member (Technical)

1 Whether Press Reporter 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 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

CORAM :

Mr. H.K. Thakur, Hon.ble Member (Technical)

Date of Hearing / Decision : 10/4/2015

ORDER No. A/10374 / 2015 dtd 10/4/2015

Per : Mr. H K Thakur;

This appeal has been filed by the appellant with respect to OIA No PJ/619/EDR-11/2012-13 dtd 26.3.2013. The issue involved in the present proceedings is whether the penalties under Section 76 and 78 of the Finance Act 1994 are imposable upon the appellants when the entire amount of service tax leviable have been paid by the appellant alongwith interest, before the issue of show cause notice. First Appellate Authority held the penalties imposed upon the appellant appropriate because tax amounts were recovered from the customers.

2. Shri Daval Shah, Learned Advocate, appearing on behalf of the appellant argued that the period of dispute is from 1.4.2006 to 31.3.2007. That as a result of visit made by the officers on 13.3.2007 to the premises of the appellant the proceedings started. It was his case that there was delay in filing the first return for the period 1.4.2006 to 13.3.2007. Subsequently, the returns were filed by the appellant in time. It was his case that service tax liability was correctly calculated by the appellant and the amount available in the cenvat credit account was promptly debited at the end of the month for which service tax was payable. That due to financial difficulty there was delay in payment of first return of the service tax and the same was paid on 14.3.2007, 23.3.2007 and 29.3.2007 which was before the issue of show cause notice dtd 9.2.2011.

3. Shri J Nair, Authorised Representative appearing on behalf of Revenue argued that the appellant only started filing returns after the case was booked by the officers of the Revenue. That once the amounts were collected and not paid within the date will amount to suppression with intention to evade payment of service tax. The Authorised Representative, therefore, defended the orders passed by the lower authorities.

4. Heard both sides and perused the case records.

5. It is observed from the case records that the appellant was registered with the revenue and was paying the service tax. It is the case of appellant that during the relevant period there was financial difficulties therefore the appellant could not pay the entire service tax within the prescribed time. It is also observed that except for the first periodical return the appellant was showing the correct service tax liability in the returns and that amount available in the cenvat credit account was debited by the appellant after the end of each month. Once the correct duty amount is shown in the returns there cannot be any intention of evade payment of service tax which is also paid by the appellant before the issue of show cause notice alongwith interest. In view of the above, there was reasonable cause for the appellant for not paying the entire service tax which was truly reflected in the periodical returns filed by the appellant. Under the Finance Act 1994, there are provisions for late payment of service tax alongwith interest which was done by the appellant before the issue of show cause notice. Accordingly, the case was also covered by Section 73(3) of the Finance Act 1994 and there was no need to issue show cause notice in this case. Appellant is also eligible for the benefit of Section 80 of the Finance Act 1994.

6. In view of the above observations, appeal filed by the appellant is allowed.

(Dictated and pronounced in the Court)

(H.K. Thakur) Member (Technical)

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