Rughani Brothers vs Commissioner Of Service Tax

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

COURT No. II

APPEAL No.ST/87814/14

(Arising out of Order-in-Appeal No.PD/ST-I/514/14 dated 28/03/2014 passed by Commissioner of Central Excise & Service Tax (Appeals), Mumbai-IV)

For approval and signature:

Honble Mr. P.R. Chandrasekharan, 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 : Yes 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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Rughani Brothers Appellant Vs. Commissioner of Service tax, Mumbai Respondent

Appearance: Shri.R.V.Shetty, Advocate for appellant Shri.R.K.Das, Dy. Comm. (AR), for respondent

CORAM: Honble Mr. P.R. Chandrasekharan, Member (Technical)

Date of Hearing : 31/03/2015 Date of Decision : 31/03/2015

ORDER NO

The appeal is directed against the Order-in-Appeal No. PD/ST-I/514/14 dated 28/03/2014 passed by the Commissioner of Central Excise & Service Tax (Appeals), Mumbai  IV.

2. Vide the impugned order, the lower appellate authority has upheld the confirmation of penalty of Rs.1,01,500/- imposed on the appellant, M/s. Rughani Brothers for delayed filing of the returns in terms of Rule 7C of the Service Tax Rules, 1994. Aggrieved of the same the appellant is before me.

3. The learned counsel for the appellant submits that the appellant delayed filing of service tax returns for the period April 2008 to March 2011 and the returns for this period was filed on 07/09/2011. The reason for not filing the return was they were exporting the services and there was no payment to be made in respect of the services rendered domestically. They have taken service tax registration for the purpose of export benefits and therefore, they were under the impression that they were not required to file the returns. However, the department issued notice dated 25/08/2011 directing them to file returns and also to pay penalty for non-filing of the returns under Section 77 of the Finance Act, 1994 The said notice was adjudicated by the jurisdictional Superintendent vide order dated 09/02/2012 wherein he imposed a penalty of Rs.10,000/- on the appellant under Section 77 of the Finance Act, 1994 for non-filing of returns. Subsequently, another show cause notice was issued vide notice dated 13/02/2012 proposing to demand a sum of Rs.1,01,500/- being the late fee required to be paid by the appellant under Rule 7C of the Service Tax Rules, 1994 read with Section 77 of the Finance Act, 1994. This penalty was confirmed by the adjudicating authority vide order dated 04/06/2012 and in appeal the same was confirmed by the impugned order.

4. The learned counsel submits that under Rule 7C, there is a cap placed on the late fee payable and the relevant provision reads as follows:

Provided that the total amount payable in terms of this rule, for delayed submission of return, shall not exceed the amount specified in section 70 of the Act

5. Section 70 as it stood at the relevant time, put a cap of penalty at Rs.2,000/- per return and therefore, the maximum penalty that could have been imposed on the appellant under Rule 7C was only Rs.12,000/- for six returns and whereas the late fee charged vide the impugned order is Rs.1,01,500/-. The appellant has already paid Rs.10,000/- under Section 77 and one return has been filed in time.

6. The learned Superintendent (AR) appearing for the Revenue reiterates the findings of the lower authorities and submits that the maximum cap under Rule 7C for delayed submission of return is Rs.20,000/- per return which came into force w.e.f. 08/04/2011. Therefore, imposition of penalty of Rs.1,01,500/- in the impugned order is sustainable in law.

7. I have carefully considered the submissions made by both the sides.

7.1. Rule 7C read with first proviso makes it abundantly clear that the maximum penalty that can be imposed under the said Rule is the one prescribed under Section 70. During the impugned period i.e. April 2008 to March 2011 the maximum penalty that could be imposed under Section 70 was Rs.2,000/-. Therefore, in respect of six returns, the maximum penalty that could have been imposed was only Rs.12,000/- and not more than that amount. Since one return has been filed in time, penalty is liable only on five returns and thus the total liability to penalty is only Rs.10,000/-. Inasmuch as the appellant has paid the said amount, there is no further liability to penalty.

8. Accordingly, while upholding the penalty of Rs.10,000/- under Section 77, I set aside the late fee under Rule 7C of the Service Tax Rules, 1994.

(Dictated in Court)

(P.R. Chandrasekharan) Member (Technical)

pj

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