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Commissioner of Central Excise, Kolhapur Versus M/s. Top Security Ltd

2015 (11) TMI 105 - CESTAT MUMBAI

Levy of penalty - delay in payment of service tax Revenue contends that setting aside penalty under Sec. 78 is not justified as case involves collection of service tax and non-payment to Government - Held That:- Declaration of liability in ST3 returns shows that assessee is duty bound and undertook to discharge service tax liability and whatever demand raised in SCN was paid alongwith interest Commissioner (Appeals) has taken all aspects into consideration and passed the order No infirmity .....

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he demand of service tax of ₹ 22,93,525/-, allowed Cenvat credit of ₹ 10,932/- and waived the penalties under Section 76 and 78 by invoking section 80 of the Finance Act, 1994 and also waived penalty imposed under section 77(2) on Shri Diwan Rahul Nanda, Managing Director of the Respondents Company. 2. The facts of the case are that the Respondent Company is engaged in providing Security Agency Service and liable to pay service tax for which they are registered with Central Excise de .....

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2.10.2009 was issued to the company as well as to Shri Diwan Rahul Nanda, Managing Director of the Respondents Company. In the adjudication, the adjudicating authority vide Order-in-Original No.02/ST/JC/Kop/2011, dated 24/28.03.2011 confirmed the demand of service tax of ₹ 29,64,569/-, demanded interest, rejected the Cenvat claim of ₹ 10,932/-, imposed penalties under Section 76 and 78 and also penalty of ₹ 5,000/- under section 77(2) on Shri Diwan Rahul Nanda. Aggrieved by the .....

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77(2) on Shri Diwan Rahul Nanda, Managing Director of the Respondents Company. Being aggrieved by the said impugned order, the revenue filed this appeal challenging the portion of the order by which the Ld. Commissioner (Appeals) dropped the penalties under Section 76 and 78 of the Finance Act, 1994. 3. Shri Sanjeev Nair, Ld. Examiner (AR) appearing on behalf of the Revenue Appellant reiterates the grounds of the Appeal. He further submits that setting aside the penalty under Sec. 78 is not jus .....

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t produced any evidence to this claim. He submits, in view of the above undisputed facts the Ld. Commissioner wrongly waived the penalties imposed by the original authority under section 76 & 78 only on the ground of financial constraints of the respondent. In support of his submissions, he placed reliance on the following judgments: (a) Remac Marketing (P) Ltd. Vs. Commissioner of Service Tax, Kolkata [2009(13) S.T.R. 658(Tri. Kolkata)]. (b) Hotel Amarjit Pvt. Ltd Vs. Commr. of C. Ex. & .....

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ears that there are two respondents, one is appellant company and other is Shri Diwan Rahul Nanda, who is Managing Director of the Company. He submits that as regard the penalty under Section 77 on Shri Diwan Rahul Nanda, Committee while reviewing the Commissioners order has not proposed the appeal against penalty under Section 77 set aside by the Commissioner; therefore, there is no appeal by the Revenue against Shri Diwan Rahul Nanda. He further submits that as regard the authorization by the .....

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ecovered the service tax and did not deposit the same to the department. They have time and again submitted before the Adjudicating authority that huge amount of receivable payments from the client become bad debts which approximately amounting to ₹ 100 crores. In view of this fact it cannot be said that the respondent have retained the service tax collected by them rather respondent have lost huge amount i.e. 100 crores as against small amount of service tax liability. Considering above a .....

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-MUM] (c) Commr. of C. Ex. Mumbai Vs. Top Detective & Security Services Pvt Ltd. [2005(180) 363 (Tri. Mumbai)] (d) Ralson Carbon Black Ltd. Vs. Commr. of C. Ex. Chandigarh-I [2014(34) S.T.R. 227(Tri. Del.)] (e) M/s. Bhagwati Caterers Pvt. Ltd. Vs. Commissioner of Service Tax, Ahmedabad [2014-TIOL-259-CESTAT-AHM]. (f) Toyota Constructions Pvt. Ltd. Vs. Commr. of E. Ex. Daman [2014(36) S.TR. 199 (Tri. Ahmd.)] (g) Commissioner of Service Tax Bangalore Vs. M/s. Motor World [2012-TIOL-418-HC-KAR- .....

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ability in the ST3 returns, it shows that they are duty bound and undertake to discharged the service tax liability and it is on record that whatever demand was raised in the show cause notice and confirmed in the adjudication order, the same was paid by the appellant alongwith interest. Taking into consideration this undisputed facts, the Ld. Commissioner has passed very reasoned order wherein he has given the waiver of penalty under Section 76 and 78. The relevant paras of the findings of the .....

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Sheet. At the same time, they had to make salary payments of their employees and they have borrowed funds to pay to employees. Due to shortage of funds and huge outstanding with debtors, they could not deposit service tax in time. They relied upon the case of CCE V/s Tops Detective & Security Services (2005) f1 STT 22 = 180 ELT 363 = 3 STR 443 (CESTAT) wherein it was held that late receipt of payments from customers was sufficient cause. They also relied on the case law in Tiger Service Bure .....

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. They stated that the company has never attempted to intentionally evade the levy of service tax at any time. It is not correct to say that the information in ST-3 return is mis-declared. They have submitted the detailed worksheet before any investigation or any audit programme. As regards unpaid service tax, they shown readiness to pay the same along with interest. Hence, penalty u/s 76 should not be made applicable to them. They could not make service tax payments in time due to financial har .....

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