M/S. Thai Airways International Public ... vs Commissioner Of Service Tax

[Arising out of Order-In-Original No. 07/AKM/CST/ADJ/2014 dated 03/02/2014 passed by Commissioner of Service Tax (Adjn), New Delhi]

For approval and signature:

Honble Mr 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. Thai Airways International Public Co. Ltd. Appellants

Vs.

Commissioner of Service Tax Respondent

(Adjn). New Delhi

Appearance:

Shri Ramesh Sharma, Advocate for the Appellants

Shri A K Dhawan, AR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Date of Hearing /decision: 22.1.2015

FINAL ORDER NOS. A/ 50250 /2015-ST(SM)

Per Ashok Jindal :

The appellant is in appeal against the impugned order for imposition of penalty under section 78 Finance Act, 1944 and under Rule 15(3) of the Cenvat Credit Rules, 2004 read with Section 77 of the Finance Act, 1994 and penalty under Rule 15A of Cenvat Credit Rules 2004.

2. The facts of the case are that audit was conducted during the period 21.1.10 to 3.2.2010. It was found that during the period May, 2006 to March, 2007, the appellant made short payment of service tax of Rs.7,18,001/-. It was also found that during the period June, 2006 to March 2007, the appellant was entitled to take 20% of the Cenvat credit of service tax paid for providing outward exempted service, but they have availed 100%, on that count, they have taken excess Cenvat Credit of Rs.23,71,100/-. On pointing out by the audit team, the whole of the amount was paid by the appellant during the period March, 2010 to June, 2010 along with interest and intimated to the department on 8.6.2010. Thereafter, the show cause notice was issued for appropriation of the amount paid by the appellant along with interest and for imposition of various penalties under Finance Act and for violation of Cenvat Credit Rules. The appellant is not disputing their liability of service tax along with interest. They are only contesting the imposition of penalty on the premise that as they have paid the entire service tax along with interest on pointing out by the department. Therefore show cause notice was not required to be issued as per Section 73(3) of Finance Act, 1994.

3. The contention of the learned Consultant for the appellant is that as the appellant has committed bonafide mistake, as in the case of demand of service tax of Rs.7,18,001, in some case appellant has paid excess amount of service tax and in some cases, short payment. Therefore, it was inadvertent mistake committed by the appellant and there was no malafide intention for the appellant to make short payment of service tax. For the demand of Rs.23,71,100/-, it is the contention of the learned consultant that the appellant was not knowing the provision of Cenvat Credit which is restricted to 20% in case of outward exempted service. Therefore, the benefit of section 80 of the Finance Act is to be given to the appellant and penalty to be dropped.

4. On the other hand, learned AR opposed the contention of the learned Consultant and submits that if the audit would not have conducted in the premises of the appellant, the truth could not have unearthed. The appellant could have enjoying the short payment of service tax and availing inadmissible Cenvat credit. Therefore, the penalties are rightly imposed on the appellants.

5. Heard both sides. Considered the submissions in detail.

6. On perusal of the record, I find that appellants in some cases made the excess payment in some cases and in some cases paid short payment. It might be on account of calculation errors but same is not coming out from the facts but it is a fact that excess service tax has been paid and in some case, short service tax has been made, therefore, I hold that it is inadvertent mistake committed by the appellant. In these circumstances, the benefit of section 80 of the Finance Act is to be given to the appellant and therefore penalty on this count for Rs. 7,18,001/- is set aside. Further, for availment of inadmissible Cenvat credit of Rs.23,71,100/-, I find that appellant is entitled to take Cenvat credit only upto 20% of Cenvat Credit. In the case of service tax for outward exempted service, it is the admission of the appellant that they are not maintaining separate accounts. Therefore, they are not entitled to take Cenvat credit more than 20%. Further I find that if the audit had not been conducted in the premise of the appellant, this fact would not have come in the knowledge of the department, therefore, I hold that on these count, appellant is liable to be penalized.

7. As appellant has paid entire amount of service tax along with interest before issuance of show cause notice, therefore penalties are restricted to 25% of the service tax involved. In these terms, appeal is disposed.

(dictated and pronounced in the open court )

( Ashok Jindal ) Member(Judicial)

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