World Class Management Service Versus Commissioner of GST & CE Chennai South Commissionerate
Service Tax
2019 (2) TMI 23 – CESTAT CHENNAI – TMI
CESTAT CHENNAI – AT
Dated:- 28-1-2019
Application No. ST/Misc/CT/41605/2017, Appeal No. ST/251/2012 – FINAL ORDER No. 40170/2019
Service Tax
Shri Madhu Mohan Damodhar, Member (Technical) And Shri P. Dinesha, Member (Judicial)
Shri S. Sivaramakrishnan, Advocate For the Appellant
Shri B. Balamurugan, AC (AR) For the Respondent
ORDER
Per Shri Madhu Mohan Damodhar
The facts of the case are that appellants are engaged in the business of man power supply and registered with the department under ‚Man Power Supply Agency Service‛. Pursuant to audit, it appeared to the department that appellants had not discharged service tax liability amounting to Rs. 77,94,334/- for the period from April 2009 and March 2010, although they realized taxable value as well as service tax from their clients. After being pointed out
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cate Shri Siva Ramakrishnan made oral and written submissions which can be broadly summarized as under :
i) Service Receivers of the Appellant Company were taking 5 to 6 months and some times more than 6 months for settling the bills of the Appellant. However, the Appellant was paying Service Tax in advance on billing basis to avoid confusion. Apart fro that, the Appellant had to pay PF and ESI to the Manpower Supplied, on a monthly basis, in addition to making salary payments to the Manpower supplied. This created a huge cash flow problem to the Appellant and the Appellant were forced to borrow loan at high rates from private financial institutions apart from the bank loans to overcome this perennial problem.
ii) Immediately pursuant to Audit, appellant had arranged private loans and paid Service Tax of Rs. 56,96,352/- and Interest of Rs. 5,23,793/-. The Appellant was issued with a Show Cause Notice invoking Penalty under Section 76. Balance amount of Rs. 20,97,982/- towards Service
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ns Pvt. Ltd.. Vs. Commissioner of GST & Central Excise, Chennai South; Final Order Nos.42768-42769 / 2018 in the case of M/s.Sri Kalki Enterprises Vs. Commissioner of GST & Central Excise, Chennai and Final Order No.42481-42482/2018 in the case of M/s.Jeyam Automotive Ltd., Commissioner of GST & Central Excise, Coimbatore.
3. On the other hand, Ld. A.R Shri A.R. Balamurugan supports the impugned order. He justifies the imposition of penalty. He also submits that appellant being partnership concern was required to pay service tax by the 5th month of the month immediately following quarter in which the payments towards the value of taxable value of services were received as per Section 68 (1) of the Finance Act, 1994. Appellants not only did not pay tax within the due dates but also withheld the above information by not disclosing to the department in the ST-3 returns. Hence for these reason, there is no ground to interfere with the imposition of penalty.
4. Heard both sides and have g
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ome time for them to recover and for that reason, the service tax liability got accumulated. Nothing is brought out from evidence that there was any positive act of suppression with an intention to evade payment of service tax. Other than the delay caused due to financial crisis, we do not find any material to establish an intention to evade payment of service tax.
7.3 The Hon'ble jurisdictional High Court in the case of C.C.E., Coimbatore Vs. M/s. Sasi Advertising Pvt. Ltd. in C.M.A. No. 101/2018 dated 24.01.2018 had occasion to consider the appeal filed by the Department against the Order passed by the Tribunal, upholding the Order passed by the Commissioner setting aside the penalties imposed. The ground raised by the assessee in that case was that the assessee was undergoing much financial hardship. The Hon'ble High Court held that the penalties imposed under Section 77 and 78 ibid., set aside by the Tribunal invoking Section 80, was correct and proper. The relevant portion of the
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on 80 of the Finance Act, 1994, notwithstanding anything contained in the provisions of Section 77 or 1st proviso to Section 78, no penalty shall be imposable on the assessee for any failure referred to in the said provisions, if the assessee proves that there was reasonable cause for the said failure.
31. Going through the reasons assigned by the assessee, on belated payment, we are of the view that the assessee substantiated reasonable cause for the failure in payment of service tax, within the stipulated time and hence, he is entitled to the benefit under Section 80 of the Finance Act.”
7.4 In C.S.T., Chennai Vs. Lawson Travel & Tours (I) Pvt. Ltd. – 2015 (38) S.T.R. 227 (Mad.), the Hon'ble High Court held that when the assessee faced financial crisis due to criminal breach of trust committed by their sub-agent and thereafter, paid the service tax voluntarily, the penalties imposed have been rightly set aside invoking Section 80. The Tribunal in the case of M/s. Dusters Total Sol
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i vide Final Order No.42768-42769/2018 dt. 23.10.2018, in a case where the appellant had pleaded that financial exigencies as a ground for non-payment of service tax in due time, this Bench held in favour of the appellant in the matter of invocation of imposition of penalty. The relevant portion of the aforesaid order is reproduced below :
“5. The appellant is contesting the penalties imposed only. In Appeal No. ST/300/2012, the adjudicating authority has imposed a penalty under section 76 and in Appeal No. ST/301/2012, the adjudicating authority has imposed penalty under section 78 of the Finance Act, 1994. The ld. consultant has furnished documents to argue that there was only delay in payment of service tax and there was no act of suppression of facts with intention to evade payment of service tax. On perusal of the documents such as the list of sundry debtors etc., it is seen that there was huge amount pending as receivables. So also they had to meet expenses for salary, accident
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