M/S. Gansons Engineers Pvt. Ltd vs Commissioner Of Central Excise & ...

[Arising out of Order-in-Appeal No. RPS/34/NSK/2013 dtd. 7/2/2013 passed by the Commissioner (Appeals) of Central Excise & Customs, Nasik]

For approval and signature:

Honble Mr Ramesh Nair, Member (Judicial) =======================================================

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. Gansons Engineers Pvt. Ltd. : Appellants

VS

Commissioner of Central Excise & Customs Nashik : Respondent

Appearance

Shri. Pradeep Korde, Consultant for the Appellants Shri. S.V. Nair, Asst. Commissioner (A.R.) for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 11/6/2015 Date of decision: 11/6/2015

ORDER NO.

Per : Ramesh Nair

This appeal is directed against Order-in-Appeal No. RPS/34/NSK/2013 dtd. 7/2/2013 passed by the Commissioner (Appeals) of Central Excise & Customs, Nasik, wherein Ld. Commissioner (Appeals) upheld the Order-in-Original dated 27/3/2012 and rejected the appeal filed by the appellant.

2. The fact of the case is that the appellant is registered with service tax department for providing Business Auxiliary Services. During the period 2006-07 to 2010-11 they made payment to the foreign agents as sales commission for procurement of export orders. During the same period they also availed GTA Service for inward carriage of goods to their factory. On both these services, the Appellant were required to pay service tax under reverse charge mechanism. During the course of audit it was revealed that appellant did not pay the service tax on both of these services. Therefore show cause notice dated 27/10/2011 was issued which was adjudicated and original adjudicating authority confirmed the demand of Service tax of Rs.4,56,721/- along with interest under Section 75 and penalties of Rs.4,56,721/- under Section 78 of Finance Act, 1994. The appellant discharged service tax liability and interest thereupon before the issuance of show cause notice, small amount of remaining interest, subsequent to the passing of the Order-in-Original paid on 4/1/2012. Aggrieved by the said order, the appellant filed appeal before the Commissioner (Appeals), who upheld the order of the original authority and rejected the appeal of the appellant vide impugned order, therefore appellant filed this appeal.

3. Shri. Pradeep Korde, Ld. Consultant for the appellant submits that as per the instruction of the appellant though the appeal filed for setting aside the impugned order but now they are not contesting the service tax demand, however their only prayer is to waive the penalty imposed under Section 78 in the original order and upheld by the Commissioner (Appeals). As regard the penalty imposed under Section 78, he submits that there was no malafide intension of the appellant for non payment of service tax. In respect of service tax on commission of overseas commission agent, the issue was under dispute whether the service tax is payable on such services and ennumber of cases, the dispute related to levy of service tax on foreign Commission agent was under litigation, which was finally settled by the Honble Supreme Court in the case of Indian national ship owner association [___________ ] and due to this position service tax could not be paid. As regard the payment of service tax on GTA, it is his submission that this is not the case that they have not paid the whole of service tax, whereas they have been paying service tax on GTA for the relevant time. In some of the cases service tax was not paid. This only because of clerical errors. He further submits that data related to short payment of service tax had been retrieved from the books of account of the appellant that clearly shows that they have not suppressed facts. They have been declaring the freight amount in their books of account and therefore it cannot be said that they have intentionally not paid the service tax at the relevant time.

4. On the other hand, Shri. S.V. Nair, Ld. Asst. Commissioner (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that appellant was registered under service tax. They are aware of the provisions of the service tax law. During the relevant time they have been paying service tax, therefore in this particular case their non payment is on account of malafide intention. He further submits that in particularly, GTA service there is vast difference between data of freight in the books of account and ST-3 returns, which clearly established that they are knowing about the correct GTA figures. They were showing lesser amount of transportation in the ST-3 returns. Therefore penalty under Section 78 was correctly imposed by the original authority and also upheld by the Commissioner (Appeals).

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

6. The appellant admittedly paid service tax amount alongwith interest and as per submission of Ld. Counsel appellant is not contesting demand of service tax paid. Now the issue to be decided by me is only waiver of penalty imposed under Section 78. I find that there is force in the argument of the Ld. Counsel as regard the non payment of service tax in respect of commission paid to the foreign commission agent that there was dispute, whether the service tax is payable on the service provided by foreign person on reverse charge mechanism and the issue has been finally decided by apex court in the case of Indian National ship owner association. As regard the GTA, I find that it is audit party during the audit, has pointed out the short payment from the books of accounts of the appellant which shows that appellant have been correctly recording the data in respect of both the services in their books of account. If this is so, then it cannot be said that there is malafide intention on the part of the appellant to evade service tax payment. It is also taken into account that the appellant has paid service tax alongwith major portion of interest before issuance of show cause notice. Taking into the consideration above facts, I am of the view that appellant have shown reasonable cause for waiver of penalty by invoking Section 80 of Finance Act. Therefore, I waive the penalty imposed under Section 78. However the demand of Service tax alongwith interest and payment thereof by the Appellant is maintained. The appeal is partly allowed in above terms.

(Dictated in court)

Ramesh Nair Member (Judicial)

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