TMI Blog2017 (10) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of differential duty before the issuance of the show-cause notice cannot be adopted as a reason for setting aside the imposition of penalty - In the present case, it already stands observed that non-payment was on account of malafide, the imposition of penalty under section 78 cannot be set aside on the ground of the appellant having deposited the entire duty and interest prior to the issuance of the show-cause notice - penalty upheld - appeal dismissed - decided against appellant. - ST/40036/2017-SM - 41600/2017 - Dated:- 9-8-2017 - Smt. Archana Wadhwa, Member (Judicial) For the Appellant - Shri K. Balasubramaniam, Adv. For the Respondent - Shri K.P. Muralidharan, AC (AR) ORDER Per: Archana Wadhwa Af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal provisions should not have been invoked against them and no proceedings should have been initiated in terms of the provisions of section 73 (3) of the Act. Learned advocate submits that the tax could not be deposited as they were facing financial crunch and have subsequently deposited the same along with interest, penalty imposed upon them be set aside. 4. Countering the arguments, learned departmental representative draws my attention to the provisions of section 78 of the Act and submits that imposition of penalty, in case of non-filing of returns or non-payment of service tax is mandatory and there is no discretion vested with the authorities to either reduce the penalty or set aside the same. He submits that the appellants have c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt initiated action. Even if it is assumed that tax was not being deposited on account of financial difficulties, nothing stopped the appellant to file the statutory returns disclosing their liability to pay service tax, in which case, it would have been a case of delayed payment and not of non-payment. The fact of non-disclosure and non-filing of returns leads to the inevitable conclusion that the appellant was doing so with malafide intention, in which case, there is clear mandate of law contained in the provisions of section 78, for imposition of penalties. 6.1 As is seen from the above, there is a clear mandate of law provided under section 78 of the Finance Act, 1994 that any person, who has not paid or short-paid the tax on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision in the case of Sunil Hi-Tech Engineers Ltd. Vs Commissioner of Central Excise, Nagpur reported as 2014 (36) S.T.R. 408 (Tri. -Mumbai) and in the case of Hindustan Petroleum Corporation Ltd, Vs Commissioner of Central Excise, Mumbai reported as 2015 (38) S.T.R. 131 (Tri. -Mum.) laying down that where there is suppression of facts proved against the assessee, imposition of penalty under section 78 of the Finance Act, 1994 is mandatory. 8. Learned advocated has contended that inasmuch as, they had paid the service tax along with interest prior to issuance of the show-cause notice, there was no justification for the show-cause notice to be issued, in terms of the provisions of section 73(3) of the Finance Act, 1994. Having go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 78 cannot be set aside on the ground of the appellant having deposited the entire duty and interest prior to the issuance of the show-cause notice. 9. Similarly, the appellant's claim of invocation of section 80 of the Finance Act, 1994 can also not be appreciated inasmuch as, the said section applies only if the assessee proves that there was reasonable cause for the failure to deposit and that reasonable cause has to be bonafide. The appellant, in the present case, is a registered service provider and is paying service tax on the value of the services. It is only that such value was not being fully disclosed, with a malafide intention to evade payment of service tax on the same. As such, there was no reasonable cause on the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rio, benefit cannot be extended. 11. The original adjudicating authority, while confirming the demand and interest and impositng penalty had already granted the benefit of reduced penalty of 25%, provided the appellant deposits the entire service, tax, interest along with 25 % penalty within a period of 30 days from the date of receipt of the order. The appellants have chosen not to exercise the option given by the Assistant Commissioner, which which case, the penalty cannot be reduced at the appellate stage. 12. For the foregoing reasons, I find no merit in the appellant's contention to set aside penalty. The impugned order is, accordingly, upheld and appeal is rejected. (Pronounced in open court on 9/8/17) - - TaxTMI - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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