2018 (6) TMI 1084 – CESTAT CHENNAI – TMI – Penalty u/s 77(2) and 78 of FA – service tax collected but not paid to Government – also service tax registration not obtained – Held that:- In the case of Sri Velmurugan Sago Factory Vs. Commissioner of C. Ex., Salem [2016 (12) TMI 646 – CESTAT CHENNAI], this very Bench of the Tribunal was considering an identical issue and held that When in the first place there was no requirement of issue of SCN itself, penalties will not survive particularly as there was some confusion on the duty rates and the continued eligibility of SSI concessions for these appellants.
–
There is no dispute with regard to the fact that the appellant has paid the duty along with interest at least three years before the issuance of Show Cause Notice, the demand of penalty equal to 15% imposed under 2nd proviso to Section 78 of the Act is bad and unsustainable. So also the fact that the appellant had obtained registration prior to the Show Cause Notice, the same is s
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
om 01.05.2011 onwards, was liable to obtain service tax registration w.e.f. that date and that the service tax collection from its customers ought to have been deposited into Government account; that the appellant having failed on both the above counts, the SCN was required. Thus, in terms of the above SCN, the following propositions were made as to why: (i) the proviso to Section 73(1) of the Finance Act, 1994, should not be invoked to demand service tax beyond the normal period of eighteen months; (ii) service tax amount of ₹ 7,86,009/- (Rupees seven lakhs eighty six thousand and nine only) (Service Tax ₹ 7,63,115/-; Education Cess: ₹ 15,262/- and Secondary & Higher Education Cess: ₹ 7,632/-) payable on the services provided by them by way of short term accommodation during the period from 01/05/2011 to 31/07/2012 as shown in Table III above, should not be demanded from them under proviso to Section 73(1) of the Finance Act, 1994; (iii) the amount of ͅ
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
should not be appropriated against the demand of interest at Sl. No (vi) and (vii) above; (ix) penalty should not be imposed on them under Section 77 of the Finance Act, 1994 for their failure to obtain service tax registration on time and for their failure to file the stipulated ST3 returns; (x) penalty should not be imposed on them under Section 78 of the Finance Act, 1994 for non-payment of Service Tax by suppressing facts from the knowledge of the Department with intent to evade payment of Service Tax. (ii) The appellant filed its reply to the above Show Cause Notice, inter alia, contending that the appellant was under a bona fide belief that the Service Tax was being paid by its Head Office at Chennai; that there was a mistake in depositing the Service Tax collected at the Head Office with the bank account on a daily basis; that the appellant took registration on 07.05.2012; that the entire Service Tax of ₹ 8,60,686/- was paid on 31.08.2012 along with interest of ₹ 90
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
(Appeals), the appellant is in appeal. 3. Shri Ayyamperumal P, Advocate appeared for the appellant and Smt. P. Hemavathi, Commissioner (DR), appeared for the Revenue. The sole ground of agitation is whether 2nd proviso to Section 78 of the Act was not applicable since the provisions of Section 73(1) were not satisfied in the case on hand. It is the contention of the appellant that the 2nd proviso to Section 78 could be invoked only when the Service Tax, interest and reduced penalty of 15% are paid within 30 days of the notice under Section 73(1) of the Act. In support, the learned Counsel relies on the following decisions: (i) Sri Velmurugan Sago Factory Vs. Commissioner of C. Ex., Salem 2017 (347) E.L.T. 185 (Tri.-Chennai) (ii) Santhi Casting Works Vs. C.C.E. Coimbatore 2009 (15) S.T.R. 219 (Tri.-Chennai.) (iii) C.C.E. Salem Vs. Best Cheran Spintex India Ltd. 2014 (33) S.T.R. 432 (Tri.- Chennai), Mount Housing & Infrastructure Ltd. vs C.C.E & S.T. Coimbatore 2014 (35) S.T.R.
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
en discharged by the appellant on being pointed out, along with interest amounts thereon, issue of SCNs for imposition of penalties under Section 11AC is an overkill. Penalty has also been imposed under Rule 27 of the Central Excise Rules, 2002 for not taking registration. When in the first place there was no requirement of issue of SCN itself, penalties will not survive particularly as there was some confusion on the duty rates and the continued eligibility of SSI concessions for these appellants. 7. In the result, all the three appeals are allowed with consequential relief, if any, as per law. 6. In the case of Shriram Epc Ltd. Vs. Commissioner of Service Tax, Chennai reported in 2014 (35) S.T.R. 564 (Tri.-Chennai), this Bench, after considering an identical issue, concluded as under: 7. I have considered submissions on both sides. It is obvious that the appellant paid entire tax liability and interest. This inference is drawn because the impugned order does not involve demands for t
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
yment when short payment was pointed out by audit as is the case in this appeal. 8. The facts of the present case are more similar to that in the case of ADECCO Flexione Work Force Solutions Ltd. (supra). So considering this decision of Hon. Karnataka High Court, I set aside the penalty imposed on the appellant. Thus the appeal is allowed. 7. Considering the above decisions/judgments/orders, I find that there is no dispute with regard to the fact that the appellant has paid the duty along with interest at least three years before the issuance of Show Cause Notice and, therefore, going by the above decisions, I have to conclude that the demand of penalty equal to 15% imposed under 2nd proviso to Section 78 of the Act is bad and unsustainable. So also the fact that the appellant had obtained registration prior to the Show Cause Notice, I find that the same is sufficient reason to hold there was no violation or contravention of Section 77(2). Hence, the appeal is allowed. ( Pronounced in
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =