M/S. Mirza International Ltd vs C.C.E & S.T. Allahabad

[Arising out of Order-in-Appeal No. 33/ST/ALLD/2015 dated 13.0.2015 by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Allahabad].

For approval and signature:

Honble Shri Ashok Jindal, Member (Judicial)

1 Whether Press Reporters may be allowed to see 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 of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

M/s. Mirza International Ltd. .Appellants

Vs.

C.C.E & S.T. Allahabad .Respondent

Appearance:

Shri Hrishikesh & Shri Anurag Mishra, Advocate for the Appellant

Shri R.K. Grover, DR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Date of Hearing: 25.08.2015

FINAL ORDER NO. 52694/2015-ST(SM)

Per Ashok Jindal:

The appellant is in appeal against the impugned order for imposition of penalty under section 78 of the Finance Act 1994.

2. The facts of the case are that the appellant is an exporter of leather product and as well as paying service tax on the commission paid to foreign agents for selling their product in international market. The appellant was paying service tax under reverse charge mechanism on the commission paid to their foreign agent. On the basis of certain news items published in the leading newspaper the appellant did not paid service tax on the commission paid to foreign agent during the period July 2007 to December 2007. In December 2007 some investigation took place in the premises of the appellant and it was pointed out that appellant is required to pay service tax under reverse charge mechanism on the commission paid to their foreign agent. Appellant immediately paid the service tax along with interest. Thereafter, revenue issued a show cause notice for appropriation of service tax paid along with interest and for imposition of penalty under section 78 of the Finance Act 1994. Adjudication took place. Amount paid by the appellant along with interest was appropriated and penalty equivalent to the service tax was imposed under section 78 of the Finance Act 1994. Aggrieved from the said order appellant is before me.

3. The Ld. Counsel for the appellant submits that the appellant paid service tax along with interest on pointing out by the department immediately. Therefore, show cause notice was not required to be issued as per section 73 (3) of the Finance Act 1944. He also submits that appellant was under bonafide belief on the basis of the news published in the leading newspaper that they are not required to pay service tax and therefore have not paid the service tax. Therefore, provision of the section 73 (3) are applicable to facts of this case and show cause notice was not required to be issued. In these circumstances, it is prayed that penalty imposed under section 78 of the Finance Act be dropped.

4. On the other hand, Ld. AR reiterated the findings of the impugned order and submits that appellant is a reputed person and he should know the law but he failed to do so. Therefore, appellant is liable to be penalized.

5. Heard the parties. Considered the submission.

6. In this case it is a fact on record that appellant was paying service tax initially but as per the news published in the leading newspaper appellant stopped payment of service tax on the commission paid to the foreign agent and it is also a fact on record on pointing out by the Department appellant immediately paid service tax along with interest without any protest. In these circumstances, provision of section 73(3) of the Finance Act 1994 are attracted in this case and show cause notice was not required to be issued to the appellant. As show cause notice was not required to be issued the penalty under section 78 of the Finance Act is not imposable. With these observations, I drop the penalty imposed by the Adjudicating Authority in the impugned order.

7. With these terms, impugned order qua imposing penalty is set aside and appeal is allowed with consequential relief if any.

(Dictated and pronounced in the open court)

(Ashok Jindal) Member (Judicial)

Bhanu

2

ST/52261/2015-ST(SM)