Mohite & Sons vs Commissioner Of Central Excise

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI

COURT No. I

APPEAL No. ST/311/10

(Arising out of Order-in-Original No. 4/ST/2010 dated 24.03.2010 passed by Commissioner of Central Excise Kolhapur)

For approval and signature:

Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical)

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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 : 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?

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Mohite & Sons Appellant Vs. Commissioner of Central Excise, Respondent Kolhapur

Appearance: Shri Sagar Shah, C.A. with for appellant Shri Kaustubh Khairnar, Advocate

Shri A.K. Goswami, Addl. Commissioner (AR), for respondent

CORAM: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical)

Date of Hearing: 05.08.2015 Date of Decision: 05.08.2015

ORDER NO

Per : M.V. Ravindran

This appeal is directed against Order-in-Original No. 4/ST/2010 dated 24.03.2010.

2. Heard both sides and perused the records.

3. On perusal of the records it transpires that the issue involved in this case is regarding the service tax liability for the period 10.09.2004 to 31.03.2009 under the category of Commercial or Industrial Construction Services. It is also seen from the records that the entire service tax liability and the interest thereof stands deposited by appellant.

4. It is the submission of the learned C.A. that the appellant is only seeking leniency in setting aside the penalty imposed under Section 78 of the Finance Act, 1994. He would draw our attention to the statement recorded by the partner of the appellant and submits that they have categorically informed the department that they are not aware of the provisions of the service tax or the Finance Act as they are from a very small city like Sangli. It is his submission that the delay in payment of service tax was also due to the reason that the amounts were to be collected from the service recipients who are not obliging readily and some of the service recipients have directly deposited the service tax to the Govt. treasury. It is his submission that due to these reasons the appellant could not take the registration or discharged the service tax liability.

5. Learned D.R. on the other hand would submit that there was an escapement of service tax liability which could not have been noticed had the department not checked the records on the premises of the appellant.

5. Considered the submissions made by both sides and perused the records.

5.1 As regards the service tax liability under the category of Commercial or Industrial Construction Services, we are of the view that the same needs to be upheld along with interest.

5.1 As regards the penalty we find that the appellant could have entertained bonafide belief that they being in an activity of construction of various schools, colleges and educational institutions, they are not required to discharge any service tax liability. In our view the appellant could have entertained a bonafide belief that the activity undertaken by the appellant may not be covered under the tax net. In our considered view, this is a fit case for invoking provisions of Section 80 of the Finance Act, 1994. Accordingly, by invoking the provisions of Section 80 of the Finance Act, 1994 we set aside the penaltiy imposed under Section 78 of the Finance Act, 1994.

6. In sum the appeal to that extent of demand of service tax liability and the interest is rejected and the penalty imposed under Section 78 is allowed.

(Dictated in Court)

(C.J. Mathew) Member (Technical) (M.V. Ravindran) Member (Judicial)

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Appeal No.ST/311/10