M/S. Saraswathi Enterprises, ... vs Commissioner Of Central Excise, ...

[Arising out of Order-in- Appeal No. NGP/ EXCUS /000/ APPL/713/13-14 dtd. 26/7/2013 passed by the Commissioner(Appeals) Central Excise, & ST, Nagpur]

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. Saraswathi Enterprises, Electrical Contractors & Engineers : Appellants

VS

Commissioner of Central Excise, Bhandara : Respondent

Appearance

None for the Appellants Shri. S.V. Nair, Asstt. Commissioner(A.R.) for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 5/6/2015 Date of decision: 5/6/2015

ORDER NO.

Per : Ramesh Nair

This appeal is directed against Order-in- Appeal No. NGP/ EXCUS /000/ APPL/713/13-14 dtd. 26/7/2013 passed by the Commissioner(Appeals) Central Excise, & ST, Nagpur, wherein Ld. Commissioner(Appeals) held that interest and penalty imposed on the appellant under Section 75, 76, 77 and 78 of the Finance Act, 1994 by the adjudicating authority are very much in accordance with law, accordingly rejected the appeal of the appellant.

2. The fact of the case is that during the course of audit of the books of account and of M/s. Ashok Leyland Limited, Gadegaon by the Central Excise Officers it was revealed that the appellant had provided management, maintenance or Repair service to M/s. Ashok Leyland Limited without paying service tax payable thereof under the finance Act, 1994. The Appellant after pointed out by the Range Officers registered as service provider under above said category of management, maintenance or repair service and after accepting their tax liability paid entire amount of service tax amounting to Rs.3,69,427/- thereafter a show cause notice dated 13/10/2011 was issued to the appellant for recovery and appropriation of the already paid service tax under Section 73 of the Finance Act, 1994, demand under section 75 and imposition of penalty under Section 76,77 and 78 of the Finance Act, 1994. Show cause notice culminated into adjudication order wherein demand of Service tax of Rs. 3,69,427/- was confirmed under Section 73 of the Finance Act, 1994. The adjudicating authority also confirmed demand of interest under Section 75 and also imposed penalty of Rs. 1 lakh under Section 78 and Rs. 3,69,427/- under Section 78 of the Finance Act. Being aggrieved by the aforesaid order-in-original the appellant filed appeal before the Commissioner(Appeals), wherein appellant prayed for waiver of penalties imposed in order-in-original on the ground that the service tax could not be paid in time due to financial constrain. Ld. Commissioner(Appeals) has rejected the appeal of the appellant and upheld the interest and penalties imposed by the order-in-original. Aggrieved by the said impugned order the appellant filed this appeal wherein he made following prayer:

PREYAR

(i) Order portion of penalties imposed /sustained vide impugned order Order-in- Appeal No. NGP/ EXCUS /000/ APPL/713/13-14 dated 26/7/2013 may be set-aside.

(ii) Demand of service tax may be reduced to 15% of gross received amount.

(iii) Benefit of SSI exemption under Notification No. 6/2005-ST may be allowed.

(iv) Pass any other as deemed fit.

3. None appeared on behalf of the appellant nor any request for adjournment was made by the appellant therefore I take up the matter for disposal on merit.

4 Shri. Ld. on behalf of the Revenue reiterates the findings of the impugned order.

5. After the consideration of submission made in appeal memo and submission made by Ld. A.R., I find that against adjudication order the appellant before the Commissioner(Appeals) has not pressed in respect of demand of service tax and payment thereof paid suo moto by the appellant therefore their contest from stage of the Commissioner(Appeals) was only on interest and penalties. Therefore prayer made by the appellant in their appeal memo. As regard the reduction of service tax, SSI Exemption under Notification No. 6/2005-ST cannot be considered at this stage. Now only issue to be decided by me is whether penalties imposed under Section 77 and 78 can be waived invoking Section 73(3)/ Section 80 of the Finance Act, 1994. From the facts and submission thereof by the appellant, I find that appellant paid total service tax amount well before the issuance of show cause notice. I find that the appellant though did not pay service tax at the relevant time but also not collected the service tax from the service recipient. It is submission of the appellant that they were not conversant with provisions of service tax law. The were under bonafide impression there was no service tax liability on them because appellant was getting petty amount of profit. The appellant out of 100% service tax charges under maintenance and repair for deployment of labours they were getting profit of 15% of the total amount. Therefore they were under impression that only 15% is taxable amount and accordingly they are not liable to pay service tax because of small scale service provider. I also considered the judgments relied upon by the appellant in the following cases:

(a) Technova Engineering Industries Vs. Commissioner of S.T. Chennai[2011(24)STR-467(Tri- Chennai)]

(b) CCE Bangalore Vs. Adecco Flexione Workforce Solutions Ltd. [2012(26) STR3(KAR)]

(c) M/s. Gupta Coal Field and Washeries Ltd. Vs. CCE Nagpur[2013(29) STR 166(Tri- Mumbai)]

I find that the ratio of the above judgment are applicable in the present case as appellant though did not pay service tax at the relevant time but after pointing out by the department immediately paid service tax that too before the issuance of show cause notice. In such a case I am of the considered view that department should not have issued the show cause notice Section 73(3) of the Finance Act, 1994, consequently no show cause notice is to be issued, no penalty can be imposed. I also carefully considered the status of the appellant who is small time service provider, major portion of service charges approx, 85 % is expenditure towards the salary, PF paid to the labourer deployed by them for providing the service therefore taking into consideration over all position of the of the appellant and their conduct, I find that the appellant has made out fit case for waiver of penalty not only under Section 73(3) but also Section 80 of the Finance Act 1994. In view of the above observations I pass following order:

(a) Service tax demand confirmed by lower authority is upheld.

(b) interest under Section 75 is upheld

(c) penalty under Section 77 and 78 are waived.

Appeal allowed in the above terms.

(Dictated in court)

Ramesh Nair Member (Judicial)

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