M/S. Mateshwari Ndrl Enterprises Pvt. ... vs Commissioner Of Central Excise, Raigad

[Arising out of Order-in- Appeal No. US/947/RGD/2012 dtd. 28/12/2012 passed by the Commissioner(Appeals). Central Excise & Service, Mumbai ]

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. Mateshwari NDRL Enterprises Pvt. Ltd. : Appellants

VS

Commissioner of Central Excise, Raigad : Respondent

Appearance

Shri. Vinay S. Sejpal, Advocate for the Appellant Shri. S.V. Nair, Asst. Commissioner(A.R.) for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 27/2/2015 Date of decision 27/2/2015

ORDER NO.

Per : Ramesh Nair

This appeal is directed against Order-in- Appeal No. US/947/RGD/2012 dtd. 28/12/2012 passed by the Commissioner (Appeals). Central Excise & Service Tax, Mumbai, wherein Order-in-Original was upheld and appellants appeal was rejected. The fact of the case is that the appellant is registered under Service Tax for Site Preparation and clearance. During the course of audit it was found that appellant had not discharged their service tax liability during the period April, 2010 to September, 2010 and also did not file ST-3 returns for the said period. The adjudicating authority confirmed the demand of Rs. 34,61,158/-, interest of Rs. 3,16,727/- and late fee of Rs. 2000/- for not filing the return in time and ordered for appropriation of the above mentioned amounts against the total payment of Rs. 37,79,885/- paid by them on 14/3/2011. Further penalty was imposed Rs. 10,000/- under Section 77 of the Finance Act, 1994 and penalty of Rs. 34,61,158 under section 78. Aggrieved by the said order the appellant filed appeal before the Commissioner(Appeals), who rejected the appeal of the appellant, hence the appellant is before me.

2. Shri. Vinay S. Sejpal, Ld Counsel for the appellant submits that the appellant is not contesting the demand of service tax and interest already paid by them and appropriated by the original authority. Their grievance is only regarding imposition of penalty of Rs. 34,61,158 under Section 78 and Rs. 10,000/- under Section 77 of the Finance Act, 1994. He submits that due to financial crises they could not deposit the service tax for the period April, 2010 to September, 2010 on due date. However, they paid service tax along with interest on 14/3/2011, ST3 returns also filed on 14/3/2011. It is his submission that this case is of only late payment of service tax and there was no intention to evade the service tax. He further submits that audit has taken place in the month of April 2011 and service tax alongwith interest paid before audit was conducted and also filed ST 3 return therefore in terms of Section 73(3) even no show notice should have been issued, therefore consequent penalty is not imposable. He submits that service tax along with interest suo-moto deposited by the appellant before issuance of show cause notice, therefore penalty under Section 77 and 78 should not be imposed. He placed reliance on the board Circular No. 137/ 167/2006-CX.4 dated 3/10/2007 and also relied upon following judgments.

(a) Vista Infotech Vs. Commissioner of Service Tax, Bangalore[2010(17) S.T.R. 343(Tri-Bang.)]

(b) Prasad Corporation Ltd. Vs. Commissioner of Service Tax, Chennai[2010(30) S.T.R. 571(Tri.chennai)]

(b) Sunita Tools Pvt. Ltd. Vs. Commissioner of Service Tax, Mumbai II [2015(37) S.TR.644(Tri.Mum)]

3. On the other hand, Shri. S.V. Nair, Ld. Asst. Commissioner (A.R.) appearing on behalf of the Revenue reiterates the finding of the impugned order. He further submits that in the present case the appellant had admittedly collected the service tax from service recipients and not deposited to the government exchequer and ST3 returns also not filed, this shows that appellant had clear intention to evade the service tax.

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

5. From the perusal of the documents and submissions made by both the sides the fact that service tax for the period of April, 2010 to September, 2010 was paid by the appellant alongwith interest on 14/3/2011 and intimated to the department by filing the ST 3 returns on the same day is not under dispute. Though the audit has pointed out the delay payment of service tax in the month of April 2011 but the appellant had deposited service tax admittedly without any contest much before the issuance of show cause notice. Therefore in my considered view the case of the appellant squarely covered under provision under Section 73(3) of Finance Act, 1994, which is reproduced below:

SECTION 73. Recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded.

(3) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person chargeable with the service tax, or the person to whom such tax refund has erroneously been made, may pay the amount of such service tax, chargeable or erroneously refunded, on the basis of his own ascertainment thereof, or on the basis of tax ascertained by a Central Excise Officer before service of notice on him under sub-section (1) in respect of such service tax, and inform the [Central Excise Officer] of such payment in writing, who, on receipt of such information shall not serve any notice under sub-section (1) in respect of the amount so paid:

Provided that the [Central Excise Officer] may determine the amount of short payment of service tax or erroneously refunded service tax, if any, which in his opinion has not been paid by such person and, then, the [Central Excise Officer] shall proceed to recover such amount in the manner specified in this section, and the period of "eighteen months" referred to in sub-section (1) shall be counted from the date of receipt of such information of payment.

Explanation 1 - For the removal of doubts, it is hereby declared that the interest under section 75 shall be payable on the amount paid by the person under this sub-section and also on the amount of short payment of service tax or erroneously refunded service tax, if any, as may be determined by the [Central Excise Officer] but for this sub-section.

Explanation 2.- For the removal of doubts, it is hereby declared that no penalty under any of the provisions of this Act or the rules made thereunder shall be imposed in respect of payment of service tax under this sub-section and interest thereon.

(4) Nothing contained in sub-section (3) shall apply to a case where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of-

(a) fraud; or

(b) collusion; or

(c) wilful mis-statement; or

(d) suppression of facts; or

(e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax.

In view of the above provisions when the assessee discharged the service tax alongwith interest without any contest and intimated same to the department, no show cause notice should have been issued. This position has been made clear by Board Circular No. 137/ 167/2006-CX.4 dated 3/10/2007 according to which proceeding shall stand concluded on payment of service tax and interest before issue of show cause notice. On going through the judgments relied upon by the Ld. Counsel it is observed that in case service tax alongwith interest was paid before issuance of show cause notice on their own by the assessee, penalty under section 76,77,78 of Finance Act, 1994 should not be imposed. In view of the above discussion, the appellant is entitle for waiver of penalty imposed under section 77 and 78, therefore the said penalties are dropped. The appeal is partly allowed.

(Dictated in court)

Ramesh Nair Member (Judicial)) sk

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