M/S.Jaypee Industrial & Medical ... vs Cce, Bhopal

(Arising out of OIO No.34/COMMR/ST/ADJ/BPL-I/2013 dt.26.9.13 passed by CCE, Bhopal)

Date of Hearing/Decision: 10.06.2015

For approval & Signature:

Honble Smt.Sulekha Beevi C.S., Member (Judicial)

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 would be released under Rule 27 of the 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 Department Authorities? Yes

M/s.Jaypee Industrial & Medical Service (JIMS) Appellant

Vs.

CCE, Bhopal Respondent

Appearance:

Present for the Appellant: Ms.Nupur Maheswari. Advocate

Present for the Respondent: Shri Rajan Khanna, AR

Coram: Honble Smt.Sulekha Beevi C.S., Member (Judicial)

Final Order No.51952/2015

Per: Sulekha Beevi C.S.

The appellant has filed this appeal challenging imposition of penalty under section 76 of the Finance Act, 1994 (hereinafter referred to as the Act) for delayed payment of service tax alongwith interest.

2. The appellant was issued show cause notice dated 8.10.2010 alleging delay in discharge of service tax liability. Though the appellant discharged the service tax liability alongwith interest, penalty under section 76 of the Act was imposed which according to the appellant is illegal and unjustified.

3. Learned DR assailed the order of the adjudicating authority and submitted that as there was delay in discharging the tax liability, imposition of penalty is mandatory as per the provisions of section 76 which provides that the assessee has to pay penalty in addition to paying service tax alongwith interest. He further, submits that the assessee is a habitual offender, that records would reveal that the service tax has been paid with delay during different months, in the relevant period.

4. The counsel for appellant contended that the assessee is a public limited company and though there has been delay in discharging the liability during the period from July 2005 to March, 2007 and April 2008 to August, 2008, the appellant had discharged the liability with interest.

5. The Boards Circular No.137/167/2006-CX-4 dated 3.10.2007 has been adverted to by the learned Counsel to explain that once service tax alongwith interest is discharged prior to issuance of show cause notice, no penalty can be imposed. It is also the case of the appellant that though the appellant had made default during this disputed period, there has been no delay in payment of service tax thereafter. That therefore, the assessee cannot be considered as habitual offender as contended by the department. She also relied upon the decision of the Tribunal in CST v. Master Kleen-2012 (25) ELT STR 439 (Kar), Shivas industrial Caterers India P.Ltd. v.CST-2014 (34) STR 367 (Tri.-Chen.), CST v. OTS Advertising P.Ltd.-2013 (32) STR 303 (Tri.-Bang.) and Jay Shipping v. CCE-2010 (20) STR 399 (Tri.-Mum.).

6. It is not in dispute that the appellant has discharged the service tax liability during above period along with interest. The only issue is whether or not penalty can be imposed under the provisions of section 76 of the Act. The records reveal that the service tax due on July, August, September, and October 2005 was paid on 24th December, 2005. The service tax due on 5th March 2006 was paid on 27th March 2006 with delay of 22 days. The tax due on 5th March 2007 was paid on 16th March 2007 with delay of 11 days. There is intermittent delay in discharging the tax liability. However, it was paid with interest before the issue of show cause notice.

7. After hearing both sides and analyzing the records, I find that the arguments raised by the learned Counsel for the appellant find force. The appellant has discharged service tax liability alongwith interest prior to issue of show cause notice.

8. In Commissioner of Service Tax, Bangalore vs. Master Kleen-2012 (25) ELT STR 439 (Kar), the Honble High Court has held as under:-

2.?The material on record discloses that the assessee on being pointed out by the authorities for not paying the service tax, has paid the service tax with interest even before the issue of show cause notice. Sub-section (3) of Section 73 of the Finance Act, 1994, categorically states that if tax and interest is paid and the same is informed to the authorities, then the authorities shall not serve any notice calling upon the authorities to pay penalty. It is unfortunate that inspite of statutory provisions, the authorities have issued a show cause notice claiming penalty. So tax and interest was paid before issue of show cause notice. Therefore, the Tribunal was justified in setting aside those orders. As the said order is strictly in accordance with law we do not find any legal infirmity that calls for interference. Therefore this appeal is dismissed.

9. In Shivas industrial Caterers India P.Ltd. v. Commissioner of Service Tax, Chennai-2014 (34) STR 367 (Tri.-Chen.), it was observed that the allegation of the department that appellant being habitual offenders entire amount is to be recovered is not sustainable as there is no distinction between habitual and one time offenders under section 73 (3) of the Act. It was held therein that penalty under section 76 is not imposable when the service tax liability alongwith interest is discharged before issuance of show cause notice.

10. In Jay Shipping v. Commissioner of Central Excise-2010 (20) STR 399 (Tri.-Mum.), it was held as under:-

4. ?I have considered the submissions made by both the sides. According to provisions of sub-Section 3 of Section 73 of Finance Act, 1994, where there is short levy of service tax, if the person chargeable with tax, pays the amount on the basis of own assessment, before service of notice, with interest, Central Excise officers shall not service any notice on him. Further, I also find that the CBEC vide its Circular No. F.No. 137/167/2006-CX., dated 3-10-2007, has also clarified that in respect of persons who voluntarily deposited the tax, no proceedings are required to be initiated. In this case, there is no dispute that the appellants had discharged service tax liability with interest before issue of show cause notice. I also find that decisions cited by the learned Chartered Accountant are also relevant. In view of the provisions of Section 73(3) of Finance Act, 1994, and precedent Tribunal decisions, appeals are allowed.

11. The above decisions squarely cover the issue in the present case. Accordingly, impugned order is set aside and the appeal is allowed.

(Dictated & pronounced in open court)

(Sulekha Beevi C.S.)

Member (Judicial)

mk

5