Mahavir Transport vs Commissioner Of Central Excise, ...

(Arising out Order-in-Appeal No. PII/AV/77/2010 dated 07.06.2010 passed by the Commissioner of Central Excise (Appeals), Pune II)

For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. P.S. Pruthi, Member (Technical)

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 No 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?

Mahavir Transport Appellant

Vs.

Commissioner of Central Excise, Kolhapur Respondent

Appearance:

Shri J.N. Somaiya, Advocate for the appellant Shri B. Kumar Iyer, Supdt. (AR) for the respondent

CORAM:

Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. P.S. Pruthi, Member (Technical)

Date of hearing : 02/07/2015 Date of decision : 02/07/2015

O R D E R No:..

Per: M.V. Ravindran:

This appeal is directed against order in appeal no. PII/AV/77/2010 dated 07.06.2010.

2. The relevant facts that arise for consideration are that appellant has engaged in activity that would fall under category of Taxable service; had not discharged the service tax liability for the period October 2005 to December 2005 under the head cargo handling services, but discharged the service tax liability under the head transport of goods by Road of availing ineligible benefit of the abatement under the said category. The appellant on being pointed out by the audit department corrected the classification, discharged the differential service tax liability along with interest on 22/3/2007 and 16/5/2007. The revenue authorities after accepting such an amount towards differential tax liability issued a show cause notice dated 25 July 2008 directing the appellant to show cause why penalties be not imposed on them. The appellant contested the show cause notice on merits and also relied on the provisions of section 73 (3) of the Finance Act, 1994 for non-imposition of penalties. The adjudicating authority as well as the first appellate authority confirmed imposition of penalties.

3. The learned Counsel appearing on behalf of the appellant submits that they are not contesting the service tax liability and interest thereof but are aggrieved by the penalties imposed. It was submitted that the provisions of Section 73 (3) of the Finance Act, 1994 are applicable in this case and relied upon the judgement of the Tribunal in the case of Tidewater Shipping Pvt. Ltd., 2008(11)STR 475 which has been upheld by the Honourable High Court of Karnataka in the case of Macro Service 2015 (37) STR J130 (Kar).

4. Learned departmental representative would reiterate the findings of lower authorities and submit that the appellant has mis-classified the services rendered by them and discharged less service tax by availing ineligible benefit of abatement.

5. We have considered the submissions made by both sides and perused the records. It is a fact that the appellant had admitted the mis-classification of the services and discharged the differential service tax liability and interest thereof before the issuance of show cause notice and, as the appellant is not contesting the tax liability and interest thereof, we uphold the impugned order to that extent.

6. As regards the penalties imposed under sections, we find that the issue involved in this case is regarding the classification of the services rendered by the appellant; we find that the activities undertaken by the appellant can be classified into any of the services and appellant might have entertained a bona fide belief that the services rendered by them can be classified under the head transportation of goods and eligible for the exemption of abatement. We also note that the appellant had made good the differential tax liability with interest on being pointed out by the revenue authorities. In our considered view the ratio of the judgement of the Tribunal in the case of Tidewater shipping (supra), and as affirmed by the Honourable High Court of Karnataka will apply in full force. We respectfully reproduce the ratio as affirmed by their lordships.

4.? Our attention was also invited to Section 73(3) of the Finance Act and also a Board's Circular based on that. The Circular and also the Section 73(3) provides that if the assessee cleared the Service Tax due along with interest on his own and even on the insistence of the departmental authority, then no penalty proceedings can be taken against them. In other words, all the proceedings against the appellants will be deemed to have been concluded. In view of the above position, we are of the view that the impugned revisionary orders, enhancing the penalties and imposing penalties under Section 78, are not in order. Further, the impugned order in Sl. No. 4 is also very harsh especially when the appellants had paid the entire amount of Service Tax and interest even before the issue of Show Cause Notice. In such circumstances, we allow the appeals with consequential relief, if any. The impugned orders are set aside.

7. In view of the factual matrix in this case and relying on the authoritative judicial pronouncements, we set aside that portion of the impugned order which upholds the confirmed penalties imposed on the appellant. Appeal is allowed to the extent it contests the penalties imposed and the penalties are set aside.

(Operative part pronounced in Court)

(P.S. Pruthi) (M.V. Ravindran) Member (Technical) Member (Judicial)

//SR

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