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2016 (8) TMI 548 - CESTAT AHMEDABAD

2016 (8) TMI 548 - CESTAT AHMEDABAD - TMI - Imposition of penalty - Section 76 of the Finance Act, 1994 non-payment of service tax - no wilful intention to evade tax payment of tax and interest on being pointed out by auditor before SCN - Held that: - any person who fails to pay service tax shall be liable to a penalty under the provisions of said section. There are no conditions or ifs and buts in the said Section. Hence, the contention of the appellant that they had not paid the service ta .....

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ght charges paid in the ST-3 Returns filed. However, they had shown the correct figures in the ledgers, which was detected by the Central Excise Audit Officers. If, the audit had not detected the same, the service tax would not have been paid and the public exchequer would have been poorer by the said amount. Thus, penalty rightly imposed. - Appeal dismissed decided against appellant. - Appeal No. ST/13568/2014 - ORDER No. A/10702 / 2016 - Dated:- 9-8-2016 - Mr. P. M. Saleem, Hon'ble .....

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contended in their appeal that in the instant case, penalties are neither imposable under Section 76 nor Section 78 of the Finance Act, 1994. 2. Heard both sides. The Learned Advocate appearing for the appellants submits that the appellants had not paid the service tax because of a bonafide mistake and there was no wilful intention to evade service tax. He further submits that as soon as the non-payment was pointed out in the audit conducted by the department, they had paid the service tax and .....

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2 (Tri.- Ahmd.)]. 3. On the other hand, the Learned Authorised Representative for the Revenue submits that the Audit held by Revenue had found out that the freight charges shown in the Freight Ledger do not tally with the figures shown in the ST-3 Returns filed by them in the year 2005-06, 2006-07 and 2007-08. The service tax payable on such differential amount of freight is demanded in the show cause notice. Therefore, he contends that the appellants had suppressed the facts in the ST-3 Returns .....

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the provisions of Section 76. As regards Section 78, he submits that the appellants had continued to suppress the facts in the ST-3 Returns filed in the 3 years. He contends that this is a deliberate suppression which the appellants repeated year after year with the clear intention to evade payment of appropriate service tax. Hence, the provisions of Section 78 is attracted and penalty is rightly imposed. He relied upon the decisions of Hon ble Kerala High Court in the case of Assistant Commiss .....

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the instant case the appellants had remitted the service tax alongwith interest before issuance of show cause notice. The issue is whether the penalties under Sections 76 and 78 are imposable under the circumstances. The provisions of the Section 76 and 78 during the relevant period were as follows:- 76. Penalty for failure to pay service tax. Any person, liable to pay service tax in accordance with the provisions of S. 68 or the rules made thereunder, who fails to pay such tax shall pay in add .....

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ntral Excise or, as the case may be, Deputy Commissioner of Central Excise in the course of any proceedings under this Chapter is satisfied that any person has, with intent to evade payment of service tax, suppressed or concealed the value of taxable service or has furnished inaccurate value of such taxable service, he may direct that such person shall pay by way of penalty, in addition to service tax and interest, if any, payable by him, a sum which shall not be less than, but which shall not e .....

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er 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 S. 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 : Provided that where such service tax as determined under .....

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be available only if the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso : Provided also that where the service tax determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, then, for the purpose of this section, the service tax as reduced or increased, as the case may be, shall be taken in account : Provided also that in case where the service tax deter .....

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s, it is hereby declared that- (1) The provision of this section shall also apply to cases in which the order determining the service tax under sub-section (2) of S. 73 relates to notices issued prior to the day on which the Finance Bill, 2003 receives the assent of the President; (2) Any amount paid to the credit of Central Government prior to the date of communication of the order referred to in the first proviso or the fourth proviso shall be adjusted against the total amount due from such pe .....

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sing or concealing the value of taxable service. We find that in the instant case that the appellant which is a limited company had suppressed the figures of freight charges paid in the ST-3 Returns filed. However, they had shown the correct figures in the ledgers, which was detected by the Central Excise Audit Officers. If, the audit had not detected the same, the service tax would not have been paid and the public exchequer would have been poorer by the said amount. Therefore, we find that pen .....

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f Tribunal in the case of Arvind Limited. We find the facts in these cases are different. The Hon ble Kerala High Court in the case of Assistant Commissioner of Central Excise vs. Krishna Poduval (supra) has examined the provisions of Section 76 and 78, in detail, as it stood at the relevant period. The Hon ble High Court held as follows:- 11. The penalty imposable under S. 76 is for failure to pay service tax by the person liable to pay the same in accordance with the provisions of S. 68 and th .....

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be a situation where even without suppressing value of taxable service, the person liable to pay service tax fails to pay. Therefore, penalty can certainly be imposed on erring persons under both the above Sections, especially since the ingredients of the two offences are distinct and separate. Perhaps invoking powers under S. 80 of the Finance Act, the appropriate authority could have decided not to impose penalty on the assessee if the assessee proved that there was reasonable cause for the sa .....

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appellant to modify Ext. P1 by withdrawing penalty levied under S. 76, is liable to be set aside and we do so. The cumulative result of the above findings would be that the Writ Petitions are liable to be dismissed and we do so. However, we do not make any order as to costs. Further the Hon ble High Court of Delhi in the case of Bjaj Travels Ltd. Vs. Commissioner of Service Tax (supra) has also examined the Sections 76 and 78 in detail and held as follows:- 15. By their very nature, Sections 76 .....

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8 of the Act. We are in agreement with the aforesaid rule. 16. No doubt, Section 78 of the Act has been amended by the Finance Act, 2008 and the amendment provides that in case where penalty for suppressing the value of taxable service under Section 78 is imposed, the penalty for failure to pay service tax under Section 76 shall not apply. With this amendment the legal position now is that simultaneous penalties under both Section 76 and 78 of the Act would not be levied. However, since this ame .....

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that even if the scope of two sections of the Act may be different, the fact that penalty has been levied under Section 78 could be taken into account for levying or not levying penalty under Section 76 of the Act. However, that was a case where the appellate authority had exercised its discretion not to levy the penalty under Section 76 of the Act, when the larger penalty had already been imposed under Section 78 of the Act. In this scenario, the appeal of the Revenue against the said view tak .....

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nterfere with the aforesaid discretion of the Tribunal. 17. However, in the instant case, the appellate authority, including the Tribunal, has chosen to impose the penalty under both the Sections. Since the penalty under both the Sections is imposable as rightly held by Kerala High Court in Krishna Poduval (supra), the appellant cannot contend that once penalty is imposed under Section 78, there should not have been any penalty under Section 76 of the Finance Act. 18. We, thus, answer question n .....

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s a default/delay in payment of service tax. On the occurrence of the default or delay, the provisions are attracted. There is no mens rea required to be proved for imposition of penalty under Section 76 as held by the Hon ble High Court of Kerala in the case of Krishna Poduval - 2006 (1) S.T.R. 185 (Ker.). Further, the Hon ble Apex Court in the case of Chairman SEBI v. Shriram Mutual Fund & Another [2006-TIOL-72-SC-SEBI] held that - In our considered opinion, penalty is attracted as soon as .....

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