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2015 (10) TMI 1732 - CESTAT MUMBAI

2015 (10) TMI 1732 - CESTAT MUMBAI - 2015 (40) S.T.R. 945 (Tri. - Mumbai) - Imposition of penalty fabrication/alteration of TR-6/GAR-7 challans and bogus challans - fraudulent act on the part of the Consultant who had pocketed the amounts of service tax which has been paid by the appellant to him to pay into the Govt. treasury - Case of Revenue is that no criminal complaint filed against consultant by appellant Further service tax returns were signed by appellant indicating the tax liability .....

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enalty imposed not sustainable - Decided against the Revenue. - Appeal No. ST/239/11 - Final Order No. A/3214/2015-WZB/STB - Dated:- 30-9-2015 - Mr. M.V. Ravindran, Member (Judicial) And Mr. C.J. Mathew, Member (Technical) Shri Anupam Dighe, Advocate with Ms Chandani Tanna, Advocate : For The Petitioner Ms. Vinitha Sekhar, Dy. Commr. (AR) : For The Respondent ORDER Per: M.V. Ravindran This appeal is directed against order-in-original No. PI/COMMR/Service Tax/14/2011 dated 25.01.2011. 2. The r .....

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r demand of tax liability and also for demand of interest and imposition of penalty. Adjudicating authority after following due process of law, confirmed the tax liability with interest and imposed equivalent amount of penalty under Section 78 of Finance Act, 1994. 3. Learned Counsel would submit that appellant is in fact at receiving end due to the Consultants embezzlement of the amounts. He submits that appellant had appointed one Mr. Deepak Joshi, Consultant to look into the regular activitie .....

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used to pocket the difference amounts. It is his submission that appellant has discharged the entire service tax liability and the interest thereof as has been worked out based upon the statement of Mr. Deepak Joshi. It is his submission that appellant is not contesting the service tax liability but is seeking setting aside the penalties imposed on the ground that they are in fact hurt by the action of the Consultant. He would submit that the appellant now produces the copy of the cash book for .....

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in in an identical issue in the case of Shri Sai Enterprises 2015-TIOL-1586-CESTAT-MUM same view was reached by the Tribunal and held that penalty is not imposable on the assessee. 4. Learned D.R. on the other hand, would submit that the appellant was in the knowledge of the activity undertaken by the Consultant. It is her submission that the statement of the Consultant Mr. Deepak Joshi clearly indicates that appellant had paid only 50% of the amount as has been recorded in the said statement. I .....

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aside the penalties imposed. She would submit that this view has been taken by the Hon ble High Court of Gujarat in the case of Indsur Global Ltd. V. Commissioner of Service Tax 2015 (38) STR 14 (Guj.). It is also her submission that the vicarious liability of any payment of service tax and interest thereof lies on the appellant. For this purpose she would read Section 238 of the Indian Contract Act and submit that appellant is liable to be penalized for mis-representation or fraud by agents. It .....

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r the fraudulent act on the part of the Consultant who had pocketed the amounts of service tax which has been paid by the appellant to him to pay into the Govt. treasury. On detailed perusal of the records, we do find that the appellant herein, in the statement recorded by the investigating authorities, has clearly recorded that he had given the amounts to Mr. Deepak Joshi who was the Consultant. It is also recorded that the appellant had insisted Mr. Deepak Joshi that they should pay the amount .....

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ted by Mr. Deepk Joshi. 6.1 On a specific query from the Bench as to what is the evidence available with the appellant to show that they had withdrawn the cash from the bank and given them to the said Mr. Deepak Joshi for discharging the service tax, the certificate produced today by the learned Counsel indicates that the cash book of the appellant during the period June 2006 to April 2009 indicates recording of an amount as payment of service tax. The said amounts were tallied by us with the am .....

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vity of the Consultant to embezzle the amount fraudulently cannot be held as has been done with the knowledge of the appellant herein. The fraudulent act of the Consultant seems to be driven by the greed of the Consultant to enrich himself. To our mind it cannot be attributable to the appellant as nothing is brought on record that the appellant had knowledge of such an activity undertaken by the Consultant. It is also not on record that the appellant had not paid any amount to the Consultant for .....

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s made by learned D.R. that appellant has to be penalized for the activity of the Consultant as the Consultant has been appointed as an agent and reading of Section 238 of India Contract Act, he becomes liability on the action of the Consultant, will not carry the case of Revenue any further. As per the Indian Contract Act, the Section 238 talks about the vicarious liability only in the case if the principal is authorized an agent to do an act in the course of business for the principals. In the .....

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