Savitri Mahila Audhyogik Sahakari Sanstha Ltd. Versus CCGST Kolhapur
Service Tax
2019 (1) TMI 70 – CESTAT MUMBAI – TMI
CESTAT MUMBAI – AT
Dated:- 31-12-2018
Appeal No. ST/85581/2018 – A/88192/2018
Service Tax
Dr. Suvendu Kumar Pati, Member (Judicial)
Shri J.N. Somaiya, Advocate for the appellant
Shri Dilip Shinde, AC (AR) for the respondent
ORDER
Confirmation of duty demand, interest and penalty on washing and ironing services (Dhulai/Estri) by the Commissioner (Appeals) against appellant has been assailed in this appeal.
2. Facts of the case, in a nutshell, is that appellant company is registered as cooperative society and also service provider which has been carrying out activities of washing and ironing of clothes of the customers in its premises on agreed upon charges, duly accounted in its books of accounts. During investigation, central excise officers verified the transactions, recorded statement of the General manager and issued show-cause cum deman
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appellant Shri J.N. Somaiya submitted that appellant is a cooperative society of rural ladies who were ignorant of the applicability of new service tax Rules post negative list regime and since the entire transactions were reflected in the books of Account, basing on which duty demand is made, there was no suppression of fact and under the bonafide belief that such dhulai/estri were not taxable services the same was not collected from the customers and paid to the government. While conceding that no ST-3 returns were filed, the ld. Counsel for the appellant pointed out that bonafideness of the appellant was apparent since there was no intention to evade payment of service tax especially when up to 03.06.2012 their activities were not taxable and for service provided thereafter also they have not collected any tax from the customer. In citing judicial decision of Bordubi Engineering Works vs. UOI 2016 (42) STR 803 (Guj), K.T. Murukan 2017 (5) GSTL-248 (Ker.) and Uniworth Textiles Ltd. 2
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relied upon by the adversaries. Admittedly appellant is a unit constituted under Cooperative Society Act and as its name indicates the members of the society are ladies but it has acquired the status of a limited company registered under the Service Tax way back in 2005 and was engaged in providing Business Auxiliary Service and transportation of goods by road services besides these two disputed services namely washing and ironing. As found from the order-in-original, appellant started paying service tax voluntarily on these two services from 01.04.2015 as laundry activities. In his detail order, the Commissioner (Appeals) has given his finding that prior to 01.07.2012 only dry cleaning was taxable and appellant's washing procedure was not scrutinised to find out the use of solvent which is most important for the purpose of determination of cleaning procedure and as the washing charges were mentioned in the invoice and same has been stated in the book of accounts, he accepted the subm
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that it would be improper to invoke Rule 7C and Section 70 of the Act to impose maximum penalty by equating the delay in filing with non-filing of return. Since respondent department has not challenged the same reduction of penalty, such reduction of penalty under Section 77(2) appears to be reasonable.
7. Now coming to the penalty imposed under Section 78 of the Act, it is imperative to have a look at the order-in-original where appellant was given an option to pay reduced penalty of 25% if duty demand along with interest was to be paid within 30 days from the receipt of this order. This itself is indicative of the fact that the amount of service tax was determined under sub-rule (2) of 73 and the reflection of detail related to such transaction are recorded in the specified records for the period beginning with 08.04.2011. moreover, when notice of show-cause is issued by extending the period of limitation to 5 years, it does not necessarily mean that fraud, collusion, wilful missta
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uppression of fact is relevant. It was further noted by the Hon'ble apex court that if the same were to be true then what would amount to ordinary default? Ultimately it was held that a specific or more serious niche is to be shown to construe the act of the appellant is fit for the applicability of proviso to Section 73(1). Further it has been rightly held in case law reported in 2016 (37) ELT 482 (SC), as submitted by the ld. Counsel, that mere omission to disclose would not amount to suppression of fact unless there was deliberate attempt to evade duty and in the instant case as there was no proof furnished by the department that suppression had taken place and finding in the order-in-original reveals that appellant had started voluntarily paying the service tax, penalty of equivalent amount under Section 78 of the Act would be a travesty of justice. Hence the order –
8. The appeal is allowed in part and the order passed by the Commissioner (Appeals) is modified as follows.
(i
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