M/S Itl Tours & Travels Pvt. Ltd vs Commissioner Of Service Tax, Mumbai

(Arising out of Order-in-Original No. 23/STC/BR/08-09 dated 24.9.2008 passed by the Commissioner of Service Tax, Mumbai).

For approval and signature:

Honble Shri M.V. Ravindran, Member (Judicial) Honble Shri C.J. Mathew, Member (Technical)

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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 : Yes 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 ITL Tours & Travels Pvt. Ltd. Appellant

Vs.

Commissioner of Service Tax, Mumbai Respondent

Appearance: Shri S.P. Sheth, Advocate for Appellant

Shri Vikram Kaushik, AC (AR) for Respondent

CORAM: SHRI M.V. RAVINDRAN, MEMBER (JUDICIAL) SHRI C.J. MATHEW, MEMBER (TECHNICAL)

Date of Hearing: 29.09.2015

Date of Decision: 20.10.2015

ORDER NO.

Per: M.V. Ravindran

This appeal is directed against Order-in-Original No. 23/STC/BR/08-09 dated 24.9.2008 passed by the Commissioner of Service Tax, Mumbai.

2. The relevant facts that arise for consideration are that the appellant is a registered unit with the Department and engaged in the activity of issuing Air Tickets for Domestic as well as International routes to its customers; discharged Service Tax liability based on the basic fare charged by the Airlines. On an investigation, it was noticed that the appellant had failed to discharge the Service Tax at appropriate rate and has also failed to file ST-3 returns correctly and due to which there was suppression of the value of the taxable services with intent to evade payment of Service Tax. Show-cause notice was issued invoking extended period along with interest and imposition of penalties. Appellant contested the show-cause notice on merits basically taking the stand that their Consultant Shri P.K. Agarwal had mis-guided them and cheated them while discharging the Service Tax liability for his personal benefits and they were dependent on him for all the Service Tax matters. It was also submitted that they have discharged the entire Service Tax liability and the interest thereof and there was no mala fide intention to evade the tax. Accordingly, they represented before the adjudicating authority to drop the proceedings initiated for imposition of penalties under Section 76, 77 and 78 of the Finance Act, 1994. The adjudicating authority after following the due process of law, did not agree with the contentions raised and rejected the same, confirmed the demand of Service Tax liability along with interest, appropriated the amounts paid and imposed penalties under Sections 76, 77 and 78 of the Finance Act, 1994.

3. Learned Counsel appearing on behalf of the appellant would take us through the entire proceedings including the show-cause notice and Order-in-Original. After reading the entire records, he would submit that the Consultant/Internal Auditor Shri P.K. Agarwal was not a qualified person, who can work on behalf of them. It is his submission that the said Shri P.K. Agarwal had cheated the company and pocketed the difference of Service Tax paid and actually payable, though the appellant company had paid the same to him. He would submit that similar issue came up before the Tribunal in the case of Commissioner of Central Excise, Pune-I Vs. Shri Sai Enterprises  2015-TIOL-1586-CESTAT-MUM; Commissioner of Central Excise, Pune-I Vs. S.P. Group Services  2015-TIOL-1587-CESTAT-MUM; and Commissioner of Central Excise, Pune-I Vs. Ganesh Enterprises  2015-TIOL-1650-CESTAT-MUM, wherein it was held that for the act of Consultant pocketing the Service Tax and giving forged challans of the assessee, penalty cannot be imposed on the assessee. It is further submitted that the appellant had believed the Consultant and hence thee was reasonable cause for setting aside of penalty by invoking Section 80 of the Finance Act, 1994.

4. Learned AR would submit that the statement of Shri P.K. Agarwal clearly indicates that Directors of the appellant company were having knowledge of the non-payment of correct Service Tax to the department during the period 1.4.2001 to 30.9.2006. It is his submission that if it is case of the appellant that Shri P.K. Agarwal had cheated them and pocketed the difference money of Service Tax paid to payable, they have not registered any case against him with the Police nor any FIR has been lodged. He would further submit that Shri P.K. Agarwal had stood by his statement when he was cross-examined by the appellants representative.

5. We have considered the submissions made by both sides and perused the records.

5.1 It is undisputed that the appellant has discharged the Service Tax liability and interest thereof on being pointed out. The learned Counsel has advanced his arguments only for setting aside the penalties imposed under Sections 76, 77 and 78 of the Finance Act, 1994.

5.2 The learned Counsels arguments for setting the penalties are unacceptable for more than one reason. Firstly, we find that Shri P.K. Agarwal had given details of the financial account of the appellant for the period 2001-02 to 2004-05 in the soft copy recorded in DVD which indicated the sales data of international and domestic air tickets and the ST-3 returns; were based on the actual Service Tax paid which was less than the total liability for the entire period. We also note that Shri P.A. Aboobakar, Chairman and Managing Director categorically stated that the Shri P.K. Agarwal was indeed the internal auditor and the documents were of their Fort Unit, Mumbai. In short, we find that the statement of Shri P.K. Agarwal indicating that there was short payment of Service Tax during the material period as undisputed.

5.2 Secondly, we find that Shri P.K. Agarwal was cross-examined by the representative of the appellant during the adjudication proceedings. We note that Shri P.K. Agarwal was put questions, of which relevant one, we reproduce, which indicates that the appellant was having the knowledge of the non-payment/short payment of Service Tax.

Q.4 On finalization of the financial account did you inform the management or the Managing Partner about the liability towards Service Tax?

Ans. Yes, it was duly informed.

Q.14 Have you ever deleted any data from the computer system related to Service Tax including payment vouchers, sales vouchers, passing general vouchers etc.?

Ans. Whatsoever Service Tax was not paid I used to transfer it to commission account which was profit to the company.

Q.16 Under whose instruction you made the aforesaid changes or did you do it on your own?

Ans. It was done with the consent of the management and I had not personally effected any changes.

Q.28 Do you know Mr. Abu Bakar is not familiar with the account keeping and he should not have given you instructions as mentioned above?

Ans. It was informed to him that the amount was available in credit balance which was not paid to the Government as Service Tax and transferred to commission account, otherwise the companys profit would be in minus.

It can be seen from the above reproduced relevant part of the cross-examination, an inference can be drawn is that the responsible officials of the appellant were aware to the fact that the difference between the amounts of Service Tax paid and Service Tax collected was credited to the profit and loss account as commission to show more profit. On the face of such categorical admission and standing by it in the cross-examination by the Internal Auditor of the company, we find no reason to interfere in the impugned order, which imposed penalty under various Sections of the Finance Act, 1994.

5.3 The learned Counsel was relying upon the three judgment of this Tribunal to canvass the argument that for the mistakes/offence committed by the Consultant, the appellant should not be punished. On perusal of the said case laws, we find that the Bench had taken a view in the facts and circumstances of those cases wherein the Consultant had admitted that he had, in fact, forged the TR-6 challan to show lesser amount of tax paid and pocketed the difference for his personal gain. These facts are not present in the case in hand. In this case, the facts are totally different. In view of this, the ratio of the case laws may not apply in this case.

6. In view of the foregoing, in the facts and circumstances of this case, we hold that the impugned order is correct and legal and does not suffer from any infirmity. Accordingly, the appeal filed by the appellant is dismissed.

(Pronounced in Court on .)

(C.J. Mathew) (M.V. Ravindran) Member (Technical) Member (Judicial)

Sinha

2 Appeal No. ST/268/08