TMI Blog2009 (4) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent were registered with service Tax Department as per provisions of the Finance Act, 1994, as they were providing services of "Air Travel Agent Service" and discharging the service tax liability. DGCEI authorities based on intelligence, visited the office premises of respondent resumed documents, and retrieved data from computers. DGCEI authorities also recorded statements of various persons. On completion of investigations it was noted by authorities that respondent had short paid service tax for the period April 2001 to August 2006. Show cause cum demand notices were issued to respondent directing them to show cause as to why service tax amount of Rs. 11.06 crores (collectively) be not demanded from them and why penalties be not imposed under section 76 and 78, interest at appropriate rate under section 75 of the Finance Act, 1994. Respondent resisted the allegations in the show cause notice on various grounds, contesting that the service tax amount calculated is erroneous and that their consultant misled them and that they should be given the benefits of Cenvat credit on input stage services utilized by them. Adjudicating authority after considering the submissions made by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication of service tax rate and also due to rounding off of the amount to next rupee. He would submit that the adjudicating authority has erroneously imposed penalty under section 78. It is his submission that respondent has paid an amount of Rs. 8.45 crores before the issuance of show cause notice. He would submit that this showed the bona fide, as respondent was not disputing the amount of service tax calculated. He would submit that the amount determinable by the adjudicating authority on the date of passing of the impugned order was 'nil' and hence provisions of section 78 does not, get attracted. It was submitted that there was a reasonable cause for failure. He would submit that respondent has 20 branches all over India doing the same volume of business. It is his submission that out 20 branches, only in two branches there is a failure, that also for the first time and that they have unblemished record. It is his submission that they had not taken credit of the service tax paid by them on the input services utilized by them during the relevant period. He would submit that if input stage credit were allowed then the service tax liability would be reduced. He submits that this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdance with the law. 8. As we have already upheld respondent's liability to service tax consequential interest under section 75 of the Finance Act, 1994, will also arise. We hold that respondent is liable to pay interest appropriate rate on the amount of service tax liability, which is to be recalculated by the Adjudicating authority. 9. As regards the penalty imposed on respondent under section 76 of the Finance Act, 1994, we find that in this case, it is attracted. Accordingly we uphold the penalty imposed on respondent under section 76 of the Finance Act, 1994 limiting it as is imposed by the Adjudicating authority. 10. As regards the penalty imposed on respondent under Section 78 of the Finance Act, 1994, we find that penalty is imposable under this section also as we have already upheld that the respondents have short paid the service tax during the relevant period. The learned counsel for respondent submitted that no penalty is imposable under this section as the service tax liability was already determined. It is seen from the adjudication order that service tax liability is determined in accordance with law. Be that as it may, we find that it is undisputed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty from Rs. 10 crores to Rs. 10 lakhs. 13. I may first state that penalty under Section 78 is mandatory penalty which cannot be reduced within the provisions of Section 78. The provisions of Section 78 and those of Section 11AC and Section 114A of the Customs Act are pan materia and the Hon'ble Supreme Cowl has in the latest decision in the case of Dharamendra Textile Processors - 2008 (231) E.L.T. 3 (S.C.) held that "when the statute provides that the penalty shall not be lesser means that thus minimum amount of penalty which is imposable". It makes no difference if part of amount is paid prior to show cause notice or after that. However I do agree that unlike Customs Act and Central Excise Act there is a power under Section 80 of the Finance Act, 1994 wherein the amount of penalty can be reduced or no penalty need be imposed. The provisions of Section 80 read as under:- "Notwithstanding anything contained in the provisions of Section 76, Section 77 or 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." 14. Thus in the circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly stated that the sales turn over taken by the department was incorrect as certain refunds and airline tax deductions were not taken into consideration and if the same are allowed then the actual liability will come to Rs. 7.29 crores approximately. This was confirmed by Commissioner but again it was found that the assessee has wrongly claimed deduction before the Commissioner and therefore Revenue has come up in appeal before the Tribunal stating that the amount demanded in the show cause notice was the correct amount as these deduction already stand allowed while calculating duty liability. This has also been conceded by the assessee before the Tribunal and it transpired that the facts were misstated before Commissioner. In these sequence of events there are no acts done by the assessee from which it can be inferred that there was a reasonable cause for him in failing to determine the correct taxable value. Mere fact that such offence has been detected only in one branch and Head Office compared to 20 branches does not mean that there was reasonable cause for failure to pay the correct service tax amount once this was deliberately done with intent to evade tax. I, therefore, hol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made there under with intent to evade payment of service tax, the person, liable to pay such service tax or erroneous refund, as determined under sub-Section (2) of Section 73, shall also be liable to pay a penalty, in addition to such service tax and interest thereon, if any, payable by him, which shall not be less than, but which shall not exceed twice, the amount of service tax so not levied or paid or short levied or short paid or erroneously refunded." As is seen from the above, if the assessee is held liable for penalty in terms of above Section, the quantum of the same shall not be less than the amount of service tax so not levied or paid by the assessee. The said section also lay down maximum limit of penalty, which shall not exceed twice the amount of service tax so not levied or paid. As such, it is seen that the minimum quantum of penalty to he imposed under the said Section is equivalent to the service tax not levied or paid and maximum limit is to the extent of double the said amount of tax. Learned Member (Judicial) has invoked the provisions of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has fairly agreed that there was lesser payment of service tax by the respondent by adopting lesser value and a particular mod us operandi. In fact, the Revenue's appeal stands allowed on quantification of demand on the respondents conceeding the fact of adoption of lesser value for the purpose of payment of tax and by wrongfully claiming the deduction. As the dispute is in respect of present branch, the fact that other branches have not indulged in such evasion of duty, cannot be made a justifiable cause for reduction of penalty. In fact, the said fact would go against the respondents inasmuch as they were expected to know the law being followed in respect of the other branches, whereas the same was not being adhered to in the present branch. 23. Similarly, the fact that it was the first time infraction by the assessee can also not advance their case for reduction of penalty quantum. The dispute in the present appeal relates to the period from April 2000 to March 2004 and the investigations were initiated by the department in or around July 2004. During the course of such investigation, show cause notice was issued to the assessees on 22-9-2005. Subsequently, on receipt of fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty is imposable under the said Section, the same shall not be lesser than the duty quantum. The Hon'ble Supreme Court in above referred case has held that in such a situation, no discretion is available with the authority on the quantum of penalty to be imposed. As both the members have upheld the applicability of Section 78, the quantum of penalty has to be equal to the duty amount. 26. In view of the above, I agree with the learned Member (Technical) that penalty imposed by the Commissioner under Section 78 of the Finance Act, 1994 to the tune of Rs.10 Crores is required to be sustained. The papers are returned to the original Bench for passing the majority order. Sd - (Archana Wadhwa) Member (Judicial) FINAL ORDER 27. In view of the majority order, penalty of Rupees Ten Crores imposed by the Commissioner on M/s. Riya Travels Tours (I) Pvt. Ltd. under Section 78 of the Finance Act, 1994 is sustained. 28. In so far as the Service Tax liability is concerned, the same has already been upheld by both the learned Members of the original Bench comprising learned Member (Judicial) Shri M.V. Ravindran and learned Member (Technical) Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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