TMI Blog2017 (10) TMI 706X X X X Extracts X X X X X X X X Extracts X X X X ..... dure prior to the period in question. The appellant's stand that service tax was not being paid on account of financial crunch cannot be appreciated in as much as they were collecting service tax from their customers and instead of depositing the same, it was being pocketed. It is evident that they retained the amount and enjoyed the financial accommodation till such time the department 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 le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... long with 25% penalty is deposited within 30 days of the passing of the order of determination of service tax. Appeal dismissed - decided against appellant. - ST/42316/2016-SM - 41595/2017 - Dated:- 9-8-2017 - Smt. Archana Wadhwa, Member (Judicial) For the Appellant Shri Sivaramakrishnan, Adv. For the Respondent Shri K.P. Muralidharan, AC (AR) ORDER Per: Archana Wadhwa After hearing both sides, I find that the appellant, who is engaged in providing C F Services and GTA Services, were registered with the department. It was noticed that they neither filed the returns for the period 2009-2010 to 2010-2011 (upto Jan. '11) nor paid service tax to the extent of ₹ 49,74,211/-. Thereafter, summons were is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 collected the service tax amount from their customers and instead of paying the same, they have retained it and have enjoyed the financial benefits. He also submits that this is a clear case of malafide, thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice 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 of any fraud; collusion; willful mis-statement; or suppression of facts or has evaded any tax provisions with an intent to evade payment of duty would be liable to equal amount of penalty. 6.2 The questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of C entral 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 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 tax, either on the basis of his own ascertainment or on the basis of tax ascertained by a Central Excise officer, before the service of the noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Accordingly, I hold that the said section is also not applicable to them. 9.1 The Tribunal in case of Inma International Security Academ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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