Sa Enterprises vs Commissioner Of Central Excise

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

COURT No. II

APPEAL No.ST/87987 & 88635/13

(Arising out of Order-in-Appeal No.PIII/RP/124/2013 dated 29/04/2013 passed by Commissioner of Central Excise (Appeals), Pune)

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?

======================================== SA Enterprises Appellant Vs. Commissioner of Central Excise, Pune-I Respondent

Commissioner of Central Excise, Pune-I Appellant Vs. SA Enterprises Respondent

Appearance: Shri.Mayur Shroff, Advocate for appellant Shri.S.V.Nair, Asst. 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

1. There are two appeals, one filed by the Revenue and the other filed by M/s.S.A. Enterprises against Order-in-Appeal No.PIII/RP/124/2013 dated 29/04/2013 passed by Commissioner of Central Excise (Appeals), Pune. Vide the impugned order, the learned lower appellate authority has imposed a penalty equivalent to 50% of the service tax amount not paid, that is, Rs.23,31,524/- under Section 78 of the Finance Act, 1994. It is against this order, the appellants are before me.

2. The appellant is a provider of taxable services of manpower recruitment and supply agency service. The appellant collected consideration for the services rendered along with service tax but failed to remit the same during the period April 2008 to June 2009. He also failed to file service tax returns since April 2007 onwards. Therefore, a show-cause notice dated 18/03/2010 was issued proposing to recover service tax amounting to Rs.46,63,047/- along with interest thereon and also proposing to impose penalties under Sections 76, 77 & 78 of the Finance Act, 1994. The said notice was adjudicated upon vide order dated 19/05/2010 and the service tax demand along with interest was confirmed and penalties were imposed on the appellant under Sections 77 & 78 of the Finance Act, 1994. The amounts paid by the appellant towards service tax and interest were appropriated in the order-in-original. The penalty confirmed on the appellant was Rs.5,000/- under Section 77 of the Act and Rs.23,31,524/- under Section 78 of the Act.

3. The said order was challenged by the Revenue before the lower appellate authority on the ground that the reduced the penalty under Section 78 would be effective only from 08/04/2011 and not prior to that date and therefore, the appellant was liable to penalty equal to the service tax short paid/not paid. The Commissioner (Appeals) however, did not accept the Revenues contention and confirmed the order of the adjudicating authority.

4. The learned Counsel for the appellant submits that the appellant could not pay the tax on account of financial problems and the proprietor of the firm was sick and therefore, they failed to discharge the service tax liability on time. But subsequently they had discharged the service tax liability and therefore, it is a case for invoking the provisions of Section 80 and the penalty could have been waived. Alternatively, he pleads that as per the order-in-original if the penalty is paid within thirty days of the receipt of the order, the liability would be only Rs.5,78,881/- which they had discharged within thirty days of the date of communication of the order and therefore, there is no further liability to penalty. It is also his another alternate plea that the penalty that could be imposed on the appellant would be only 25% of the service tax amount short paid, that is Rs.11,65,762/- and no penalty over and above this amount is sustainable in law.

5. The learned Assistant Commissioner (AR) appearing for the Revenue on the other would submit that the revised penalty came in force only with effect from 08/04/2011 and is only prospective in nature. The period of short payment is prior to this amendment and therefore, the provisions of Section 78 as it stood prior to 08/04/2011 shall apply and the appellant should have been subjected to the mandatory penalty equal to the service tax short paid or not paid.

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

6.1 Prior to 08/04/2011, Section 78 envisaged imposition of penalty equal to service tax short paid or not paid if such short/non-payment was on account of willful mis-statement, suppression of facts or contravention of any other provisions of the Act with an intent to evade service tax. In the present case, the appellant had collected the service tax amount from his customers but failed to remit the same to the exchequer. It is also on record that the appellant failed to file statutory returns required to be filed by him. This conduct of the appellant clearly falls within the mischief of willful misstatement/suppression of facts and therefore, the appellant does not deserve the benefit of Section 80 of the Act. Further, since Section 78 as its stood at the relevant time did not provide for any reduction in the mandatory penalty equal to the amount of service tax not paid/short paid, the benefit of amended provision which came into force with effect from 08/04/2011 could not have been extended to the appellant. Penal provisions are substantive in character and therefore, the provisions that shall apply are those existing at the time of commission of the offence. Therefore, there was no scope for the lower appellate authorities to reduce the penalty from the statutory stipulated penalty equal to amount of service tax short paid. The decision of the Honble Apex Court in the case of Dharmendra Textile Processors [2008 (231) ELT 3 (SC) ] and Rajasthan Spinning & Weaving Mills [2009 (238) ELT 3 (SC)] shall apply in the facts of the present case. To conclude, I allow the appeal filed by the Revenue and dismiss the appeal filed by M/s.S.A. Enterprises.

(Dictated in Court)

(P.R. Chandrasekharan) Member (Technical)

pj

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