TMI Blog2016 (5) TMI 902X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 38A of the Central Excise Act, for saving erstwhile Section 78 of the Finance Act, nor even anything provided in the amended Section 78 regarding the non applicability of the amended provisions in the case pertaining to the period prior to amendment. In such situation amended Section 78 shall clearly apply at the time of Adjudication of the show cause notice. Therefore, no infirmity found in the impugned order hence the same is upheld. As regard assessee's appeal for waiver of 50% penalty imposed under Section 78. It is found that admittedly the assessee have collected the service tax and not deposited to the Government exchequer. They have also not filed return in respect of the transaction for which service tax was collected and not deposited. In this fact, it is a clear case of suppression of fact with intent to evade payment of service tax, therefore no reasonable cause has been shown by the assessee in order to invoke the Section 80. The penalty was rightly imposed under Section 78 by the lower authority which is upheld. - Decided against the revenue - Appeal No.ST/86533/2015 & ST/CO-91140/2015, Appeal No. ST/86269/2015 - A/87336/16/SMB, A/87337/16/SMB, A/87338/16/SMB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve from 8.4.2011 is taxable and accordingly the penalty was imposed to the extent of 50% as per the new Section 78 instead of 100% imposed by the adjudicating authority applying the erstwhile Section 78 of the Act. Aggrieved by the order the assessee filed appeal for waiver of 50% penalty of Section 78 by invoking the Section 80 and Revenue also filed appeal against the reduction of penalty from 100% to 50%. The assessee also filed cross objection in the matter of Revenues appeal. 3. None appeared on behalf of the appellant nor any adjournment request is on record, this matter were listed a number of time on the earlier occasion on 13.11.2015, 1.1.2016, 5.2.2016, 17.2.2016 but none appeared on any occasion. I therefore, have no option except to decide the matter on merit. 4. Ms. P. Vinita Sekhar Ld. Deputy Commissioner (A.R.) appearing on behalf of the Revenue, in the Revenue s appeal reiterating the grounds of appeal submits that as regard application of new Section 78, the same is not applicable in the cases which were made out before the enactment of the new Section 78 and at the time of cause of action the old Section 78 was enforced. Therefore the penalty is liable to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable in case the where transactions are recorded in the books of the assessee, when the offence was taken place during the period of unameded Section 78. I find that in this issue Ld. Commissioner (Appeals) has given detailed findings which is reproduced below:- 6.1 I have carefully gone through the Appeal Memorandum and the case records. As the Appellant has filed this Appeal only in respect of quantum of penalty imposed under Section 78 of the Act, therefore, the only issue to be decided in the present appeal is whether penalty has been correctly imposed by the Ld. Adjudicating authority under the substituted Section 78 of the Act in respect of the Manpower Recruitment or Supply Services and Security Agent Services provided by the Respondent. 7. Not declaring the supply of said services and not paying the Service Tax payable thereon during the period covered by the Show Cause Notice/Order-in-Original clearly proves the Respondent's intent to evade Service Tax thereon. Their payment of a small portion of the Service tax, further confirms their intent to evade Service Tax. Thus, I agree that the Respondent are liable for penalty under Section 78 of the Act, especial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but have fallen short of discharging their tax liability. Simultaneously, deliberate evaders with unrecorded business transactions will be dealt with more severely. Similar changes are being carried out in Central Excise and Customs laws. The details of the provisions are in the Finance Bill. Along with presentation of Budget in Lok Sabha by Hon'ble Finance Minister, Simultaneously, the joint Secretary (TRU) in the Ministry of Finance issues a D.O. letter which also explains the rationale and intentions between the legislative changes introduced through the Finance Bill. In respect of amendment made vide Finance Act, 2011, which had substituted Section 78 of the Act w.e.f. 08.04.2011, the intention can be understood in detail from the letter D.O.F. no. 334/3/2011-TRU dated 28.2.2011-TRU dated 28.2.2011 of J.S. TRU-II, wherein the rationale behind the substituted Section 78 of the Act has been explained as under:- 4. Compliance Mechanism: 4.1 The existing scheme relating to compliance has been proposed for a revamp with a view to strike a healthy balance between the interests of revenue and legitimate business and to promote voluntary compliance. 4.2 As a re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... below ₹ 60 lakh. 4.7 Penalty for failure to pay tax under section 76 is being halved. 4.7 Penalty for failure to pay tax under section 76 is being halved. 4.8 The maximum penalty under section 77 for contravention of various provisions is proposed to be increased from ₹ 5000/- to ₹ 10000/-. However, the daily rate of penalty, wherever applicable, is being retained. 4.9 Penalty under Section 78 is being altered from upto twice the amount of tax to an amount equal to the tax. Moreover, in situations where the taxpayer has captured the true and complete information in the specified records, penalty shall be 50% of the tax amount. The latter penalty (only) shall be further reduced to 25% if the tax dues are paid within a period of one month together with interest and reduced penalty. For assessees with turnover upto ₹ 60 lakh the period of one month shall be increased to ninety days. 4.10 Section 80 is being amended by substituting section 78 with the words proviso to section 78 and thus the power to waive penalty shall be available only in cases where the information is captured properly in the specified records. 4.11 The revised posi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it existed prior to 8/4/2011. Therefore the saving provisions under the said Section 38A of the CEA are not capable of saving the provisions of erstwhile Section 78 of the Act, as they existed prior to their substitution w.e.f. 08.04.2011. 10. IN addition, I have also noticed that what can be saved under Section 38A of the CEA can only be any Rule, Notification or Order made or issued under the Central Excise Act, 1944 or any notification or Order issued under any Rules which are issued under the Central Excise Act, 1944. Since the relevant Section of the Act (ie. Section 78) has itself been substituted, this substitution goes out of the purview of said Section 38A which is not applicable in respect of any Section of the Act or any Section of the CEA. In other words, Section 38A of the CEA enables saving of only the delegated legislation (vizz. Rule, Notification, Order) and is not capable of saving any action under any Section of the CEA or any action under the Act. The present Appeal has lost sight of the fact that the scope of Section 38A is very limited and the said Section 38A can be pressed into service only when a rule, notification or order made or issued under the Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n shall be convicted of any offence except for violation of a law in force at the time of the commission of the act charged as an offence prohibits nor shall he be shall be subjected to a penalty greater than which might have been inflicted under the law in force at the time of the commission of the offence. It is quite clear that in so far as the Central Amendment Act creates new offences or enhances punishment for a particular type of offence no person can be convicted by such ex post fact law nor can the enhanced punishment prescribed by the amendment be applicable. But insofar as the Central Amendment Act reduces the punishment for an offence punishable under Section 16(1)(a) of the Act, there is no reason why the accused should not have the benefit of such reduced punishment. The rule of beneficial construction requires that even ex post facto law of such a type should be applied to mitigate the rigour of the law. The Principle is based both on sound reason and common sense. This finds support in the following passage from Craies on Statute law, 7 th Edn. At pp. 387-88; A retrospective statute is different from an ex post facto statute, Every ex post facto law Chase J. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fence created by a former statute and affixes a different punishment, varying the procedure, the earlier statute Is repealed by the later statute see also Smith Vs. Benabo [(1937 1 All ER 523]. In Regina vs. Youle, [1961) 158 ER 311] Marin B said in the oft quoted passage: If a statute deals with a particular class of offences, and a subsequent Act is passed which deals with precisely the same offences, and a different punishment is imposed by the later Act, I think that, in effect, the legislature has declared that the new Act shall be substituted for the earlier Act. The rule is however subject to the limitation contained in Art. 20(1) against ex post facto law providing for a greater punishment and has also no application where the offence described in the later Act is not the same as in the earlier Act i.e. when the essential ingredients of the two offences are different. 13. In view of the above discussion it clearly emerges that neither there was any intention to save the tougher provisions of Section 78 of the Act after 8/4/2011, nor Section 38A of the CEA is legally capable of saving the provisions of erstwhile Section 78 of the Act, as Section 78 is not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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