M\/s. Birla Cotsyn (I) Ltd. Versus CCE & GST, Nagpur
Service Tax
2018 (9) TMI 1147 – CESTAT MUMBAI – TMI
CESTAT MUMBAI – AT
Dated:- 17-9-2018
ST\/85750\/18 – A\/87298\/2018
Service Tax
Dr. Suvendu Kumar Pati, Member (Judicial)
\nFor the Appellant : Ms. Lalita Phadke, Advocate
\nFor the Respondent : Shri Suresh, (AR)
\nORDER
\nConfirmation of penalty and invocation of extended period after discharge of duty liability along with interest by the Commissioner (Appeals), CE&GST, Nagpur in his order No. NGP\/EXCUS\/000\/APPL\/540\/17-18 dated 28.11.2017 is being challenged in this appeal.
\n2. Facts giving rise to the present appeal can be summed up as violation of provision contained under Section 66A of the Finance Act, 1994 by the appellant in not paying service tax of `12,78,540\/- against payment made to overseas commission agent to the tune of `1,31,89,860\/- for services falling under category of Business Auxiliary Service. Under the reverse charge mechanism, appellant company is <\/p>\n
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Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ong with interest has already been made by the appellant and they had abandoned their right to contest the tax liability when the matter was before the Commissioner (Appeals). In the present appeal, the appellant is only contesting penalty and the invocation of extended period since appellant, being pointed out by the department, immediately paid the amount of service tax along with interest much prior to the issue of show-cause notice and the said payment being made to the overseas party was duly disclosed in the books of accounts of the appellant, there was no suppression or malafide intention on the part of the appellant to evade tax. He pleads that appellant was under the bonafide belief that the said activity was not chargeable and being pointed out by the auditor, it discharged the tax liability and interest as well as informed the department for which it is entitled to the benefit of Section 73(3) of the Finance Act, 1994. In support of his argument several case laws are cited b<\/p>\n = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n n in the appellant's case, lenient view may be taken in respect of penalty imposed on the appellant. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n oad and not in India in which case, service tax is not leviable under reverse charge mechanism. Further, it lays emphasis that taxable event is on rendering of services and not on the person for which government cannot levy service tax on the services provided abroad and not received in India. Hence service tax demanded and commission paid to overseas parties for services rendered abroad needs to be interpreted in its true spirit but without explaining the indulgence of the company and merely quoting the sections of law in the impugned show-cause notice, order-in-original was passed that was being confirmed by the Commissioner (Appeals). The appellant further submitted that when there is a clear belief that no liability of service tax is existing, both while computing the service tax payable and filing periodic returns as assumed to be required by law, there would not be any liability towards penalty and interest for non-disclosure of the details in the periodic returns. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n o register and to maintain books of accounts etc. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n with effect from 08.05.2010 and sub-rule 4 has all along been existing since implementation of Finance Act, 1994. Therefore, there is no need to venture into such debate that explanation 2 providing non-imposition of penalty under any of the provisions of Act and Rule on fulfilment of requirement of sub-rule(3) would have application to sub-rule 4 since subrule 4 starts with an non-obstinate clause “nothing contained in sub-rule 3 shall apply” to a case where service tax has not been levied or paid or short levied or short paid or erroneously refunded by reason of those five grounds mentioned above under proviso to sub-rule (1) of Rule 73. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n e the department has levied the service tax on the consideration that appellant is residing in India. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n o situation for which, a limitation period of six months may apply. In our opinion, the main body of the Section, in fact, contemplates ordinary default in payment of duties and leaves cases of collusion or wilful misstatement or suppression of facts, a smaller, specific and more serious niche, to the proviso. Therefore, something more must be shown to construe the acts of the appellant as fit for the applicability of the proviso.” = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" M\/s. Birla Cotsyn (I) Ltd. Versus CCE & GST, NagpurService Tax2018 (9) TMI 1147 – CESTAT MUMBAI – TMICESTAT MUMBAI – ATDated:- 17-9-2018ST\/85750\/18 – A\/87298\/2018Service TaxDr. Suvendu Kumar Pati, Member (Judicial) For the Appellant : Ms. Lalita Phadke, Advocate For the Respondent : Shri Suresh, (AR) ORDER Confirmation of penalty and invocation of extended period … Continue reading “M\/s. Birla Cotsyn (I) Ltd. Versus CCE & GST, Nagpur”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-13855","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/13855","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=13855"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/13855\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=13855"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=13855"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=13855"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\n4. Ld. AR on the contrary, in citing judicial decisions reported in 2013 (30) STR 3 (Guj)., 2015(39) STR 386 (Mad.), 2015 (38) STR 249 (Tri-Bang.) argued that duty paid by the assessee prior to issue of show-cause would not ipso facto alter the liability of mandatory statutory penalty. He further argued that when appellant tacitly conceded suppression of fact with intent to evade payment of service tax, though paid prior to issue of show-causes but paid only after investigation launched by the department will not provide him the benefit of section 80 of the Finance Act, 1994 and in the instant appeal, contrary to the averment of the appellant that such irregularity was pointed out in the course of routine audit, such evasion of duty was in fact discovered by the preventive branch officer on the basis of intelligence report as can be seen from the show-cause, Order-in-Appeal and order-i<\/p>\n
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\n6. These abov<\/p>\n
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\n7. The contention of the appellant that there was no ill intention that can be attributed to evade tax since all the tax liabilities were addressed with due payment of interest after the same being identified by way of audit. This being the circumstantial situation on record, it is imperative to have a look on the provisions contained in Finance Act, 1994 that enables assessment beyond the extended period on grounds of suppression, non-disclosure etc. and to analyse if there was any ill intention on the part of the appellant to evade tax so as to impose penalty contemplated under Section 78 of Finance Act, 1994.
\n8. Proviso to Section 73 reads as follows:-
\n “PROVIDED that where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of-
\n (a) fraud; or
\n (b) collusion; or
\n (c) wilful mis-statement; or
\n (d) suppression of facts; or
\n (e) contravention of any of the provi<\/p>\n
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\n9. Be that as it may, it is now to be seen as to how this practice of fraud, collusion, submission of “wilful” misstatement or suppression of fact vis-a-vis contravention of provisions of this chapter and rules made thereunder “with intend to evade tax payment” is to be established and on whom the burden lies. In an adversarial judicial system and a<\/p>\n
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\n10. During the course of hearing, the ld. Counsel for the appellant has placed his reliance on the Circular no. 137\/167\/2006\/cx-4 dated 03.10.2007 and pleaded that in respect of payment of interest and penalty along with service tax in full, all proceeding against the appellant should have been closed but a close reading of the statute would reveal that in respect of Section 73(1)(a) of the Finance Act, 1994 adjudication proceeding can be concluded in cases of wilful suppression, fraud, collusion etc. if along with tax and interest, penalty equal to 25% of service tax was voluntarily paid by the assessee even one month from the date of issue of show-cause, which in the instant case is not done to make that circular applicable for the appellant. Similarly, in the case law submitted by the ld. AR, as referred supra, neither any reference is available to the circular dated 03.10.2007 nor<\/p>\n
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\n11. In view of the above facts and circumstances, and in view of the fact that parameters of proviso to Section 73 and ingredients constituting suppression of fact by the appellant has not been made out and the same had not been established by the respondent department before the authorities adjudicating the matter, it can safely be concluded that Section 4 would have no application to the case of the appellant attracting penalty, in which case explanation 2 to sub-section (3) of Section 73 will have its effect. Hence the order-
\nORDER
\nThe appeal is allowe<\/p>\n
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