M/S. Radhe Residency vs Commissioner Of Central Excise & S.T., ...

(Arising out of OIA-SUR-EXCUS-001-APP-37/14-15 dated 21.05.2014, Passed by Commissioner (Appeals) Central Excise, & S.T., Surat)

M/s. Radhe Residency : Appellant (s)

VERSUS

Commissioner of Central Excise & S.T., Surat : Respondent (s)

Represented by :

For Appellant (s) : Shri Manoj N. Makhania, Chartered Accountant For Respondent (s) : Shri Govind Jha, Authorised Representative

For approval and signature :

Mr. H.K. Thakur, Honble Member (Technical)

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 should be released under Rule 27 of 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 Departmental authorities?

Yes

CORAM :

Mr. H.K. Thakur, Honble Member (Technical)

Date of Hearing / Decision : 18.06.2015

ORDER No. A/10817/2015 Dated 18.06.2015

Per : Mr. H.K. Thakur;

This appeal has been filed by the appellant with respect to OIA No. OIA-SUR-EXCUS-001-APP-37/14-15 dated 21.05.2014, under which the first appellate authority has upheld the penalty imposed by the adjudicating authority under Section 78 of the Finance Act, 1994, under OIO dated 31.01.2014.

2. Shri Manoj Makhania (Chartered Accountant) appearing on behalf of the appellant argued that appellant is engaged in providing taxable services falling under the category of Construction of Residential Complex services, under Section 65 of the Finance Act, 1994. That during the course of audit of the appellant an income of Rs. 1,10,11,000/- was found disclosed to the Income Tax department under Section 133A of the Income Tax Act, 1961. That before the date of audit, the appellant had already paid the differential service tax of Rs. 3,40,240/- and interest of Rs. 27,219/- was immediately paid by the appellant as pointed out by the audit. It was the case of the learned Chartered Accountant that when differential service tax amount was paid before detected by the department, therefore, their case was covered under Section 73(3) of the Finance Act, 1994 and no show cause notice was required to be issued to the appellant. It was also the case of the appellant that no fraud or suppression with intention to evade payment of service tax is involved as it is not a case where service tax has been collected from the customers and not deposited with the Government.

3. Shri Govind Jha (AR) appearing on behalf of the Revenue argued that appellant has paid service tax only after the raids conducted by Income Tax department and after certain income was disclosed to the Income Tax department, which was required to form the assessable value under Finance Act, 1994. He relied upon order No. A/754/WZB/AHD/2010 dated 23.06.2010 passed by this Bench where under similar circumstances the penalty imposed upon the appellant was upheld.

4. Heard both sides and perused the case records. The issue involved in the present proceedings is whether penalty under Section 78 of the Finance Act, 1994 is required to be imposed upon the appellant who has paid the entire differential service tax liability before the same was detected by Revenue. It is evident from the facts of the case that differential service tax amount was paid by the appellant before the date of visit of the audit officers. Only the interest amount was not paid by the appellant, which also was paid by the appellant before issue of show cause notice. Learned AR has relied upon the case law of this Bench in the case of M/s. Bajrang Security Services vs. Commissioner of Service Tax, Ahmedabad - Order No. A/754/WZB/AHD/2010 dated 23.06.2010. It is observed from the facts of this case, as recorded in Para 1 of the order dated 23.06.2010 passed by this Bench, that the premises of the appellant in that case was searched on 10.03.2008 and the payments were made on 19.03.2008 and 31.03.2008. In the relied upon case law, the payments were therefore made after the date of detection by the Revenue whereas, in the present case, the appellant paid the entire amount of service tax before it was detected by the department and the interest was also paid by the appellant as soon as pointed out by the audit. In the instant case no intention to evade payment of service tax can be attributed on the part of the appellant and penalty under Section 78 of the Finance Act, 1994 is not imposable. Further, as the entire amount of differential service tax and interest was paid before the issue of show cause notice, therefore, it was the case for non issue of show cause notice under Section 73(3) of the Finance Act, 1994.

5. Based on the above observations, the appeal filed by the appellant with respect to imposition of penalty, is allowed.

(Order dictated and pronounced in the Court)

(H.K. Thakur) Member (Technical) .KL

2