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TMI Blog2017 (10) TMI 662X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the course of audit of the accounts, it was found that details of service tax paid for the period 2009-10 and 2010-11 were not reconciled with P & L accounts. As per the P & L account, the service tax payable for the period 2009-10 and 2010-11 was worked out to Rs. 25,63,720/- whereas according to ST-3 returns service tax paid was only Rs. 20,67,092/-. Thus, a short payment of Service Tax of Rs. 4,96,629/- was noticed. Further, it was noticed that appellant had received Rs. 95,00,969/- as service charge during the period from April 2012 to December 2010 but had not discharged the tax liability of Rs. 8,84,648/- on it. Thus, they have contravened the provisions of sections 68 and 70 of the Finance Act, 1994 read with Rules 6 and 7 of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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. 5. 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 collected the service tax amount from their c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 7. 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 of any fraud; collusion; willful mis-statement; or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner 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. 9. Learned advocated has contended that in as much 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 gone through the same, I find that if an assessee deposits the service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re duty and interest prior to the issuance of the show-cause notice. 10. Similarly, the appellant's claim of invocation of Section 80 of the Finance Act, 1994 can also not be appreciated in as much 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 service. 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 part of the appellant to believe that the service tax was not required to be paid. A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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