TMI Blog2017 (11) TMI 1787X X X X Extracts X X X X X X X X Extracts X X X X ..... he Bench observes that in the earlier show cause notice, penalty was proposed under Section 78 of the Finance Act, 1994 on the applicant on grounds of suppression of facts, with an intent to evade payment of Service Tax and accordingly vide Final Order No. 46/2014-S.T., dated 20-10-2014, a penalty of ₹ 15,00,000/- was imposed on the applicant under the provisions invoked in the Notice - the amendment by insertion of explanation to Section 32-O is to emphasize that the concealment of particulars of duty liability related to concealment made from the Officer of Central Excise and not from the Settlement Commission. However, in the case of the applicant the earlier order was passed on 21-10-2014 after the amendment of Section 32-O was made clarifying that once penalty is imposed on the applicant for any concealment made from the Central Excise Officer, then the bar of subsequent application under Section 32-O would apply. The Bench notes that in respect of the application relating to the Final Order No. 46/2014-S.T., dated 21-10-2014, the SCN has been issued invoking suppression of facts on the part of the applicant. Accordingly, a penalty of ₹ 15 lakhs was imposed on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Adjn) issued by the Commissioner of Service Tax, Bangalore demanding Service Tax of ₹ 6,23,72,019/- along with interest thereon and proposing to impose penalties under Sections 76, 77 78 of the Finance Act, 1994. The applicant is registered with Service Tax vide Registration No. AABFE314EST001 under the category of taxable services namely, Mandap Keeper, Health Club Fitness Centre, Beauty Parlour Service, Dry Cleaning Service . 1.2 Based on information that the applicant had been charging and collecting service tax but not remitting the same to the Government, investigations initiated against the applicant vide letter dated 16-9-2014 and the Managing Director of the company was summoned. The applicant on 17-9-2014 produced ledger extracts pertaining to Service tax for Outlets (Restaurant Services), Outlets for Room and M. Bar (Accommodation), Banquets ((Mandap Keeper Service) IRDFD, BEV Smoke (Catering Service) BQ BC Hallhire (BAS) Telephone Services, TRV (Rent-a-cab) and Guest Laundry Service for the period from Oct. 2012 to August 2014. Self attested list of major customers, financial statements and Balance sheets were also submitted. A statement was recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 95788 64642 371829 Total 17837,487 15340899 17104721 12088912 6,23,72,019 1.3 As the applicant failed to pay the Service tax payable and failed to obtain/amend registration to include Accommodation Service, Restaurant Services and Internet and Communication Services and also did not file ST-3 returns. They were issued with the aforesaid show cause notice demanding Service tax of ₹ 6,23,72,019/- as shown above under Proviso to Section 73(1) of the Finance Act, 1994 along with appropriate interest under Section 75 of the Act, ibid. The Notice also proposed to impose penalties on the applicant under Sections 76, 77 and 78 of the Finance Act, 1994. Applicant s Disclosure : 2.1 The applicant filed the application before the Additional Bench of Settlement Commission, Chennai on 30-5-2017 and the same was numbered as S.A. S. Tax/57/2017-SC. As the applicant had filed an application for settlement in an earlier case SA (ST) 28/2014 and the same was settled imposing penalty of ₹ 15,00,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndi, the proposal to impose penalties under Sections 76, 77 and 78 of the Finance Act, 1994 has no justification. The failure to pay the service tax within the due dates was on account of the fact that the banks had been appropriating amounts flowing in their accounts towards loans/advances and therefore there is little or no justification to impose penalties. The applicant prayed for leniency in imposing of penalties and also prayed for waiver of prosecution considering the overall facts and the grounds and the wholehearted cooperation extended during investigation 2.3 In response to the first notice asking them as to why the application filed should not be rejected on the ground of statutory bar on filing subsequent application as per Section 32-O of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994, the applicant s counsel vide letter dated 12-6-2017 submitted that in the Final Order No 46/2014-S.T., dated 21-10-2014 passed by the Settlement Commission, there are no findings of suppression of facts or concealment of particulars of service tax by the applicant and the bar contained in Section 32-O of the Central Excise Act, 1944 is intended to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... much as the applicant had provided taxable services, charged and collected service tax from the customers without remitting to the Government Exchequer and did not file ST-3 Returns in time warranting invoking of Proviso to Section 73(1) of the Finance Act, 1994. But for the initiation of investigation by the Department, the lapses would have come to the notice of the Department and revenue loss to the Government Exchequer would have gone unnoticed. Verification of the Ledger extracts and sample invoices revealed that the applicant had promptly accounted the Service tax amount payable for each service and had charged and collected service tax from their customers which is also confirmed by the statement dated 17-9-2014 of Shri Kuppu Raj, MD. The total service tax payable by the applicant works out to ₹ 6,23,72,019/- as against ₹ 3,90,57,952/- paid in cash and the total interest in respect of amounts paid after due dates works out to ₹ 2,31,31,708/ out of which the applicant has paid ₹ 2,23,04,355/- As the applicant had provided taxable services without payment of Service tax, charged and collected service tax from the customers without remitting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sentative on maintainability of the application reiterated the submissions made in the Commissioner s report C.No. IV/16/314/2014-S.T.-Adjn., dated -10-2017 and argued that the present application is not maintainable as it is squarely covered by the bar imposed by Section 32-O sub-clause (1)(i); that the said final order dated 21-10-2014 of the Hon ble Settlement Commission clearly mentions that the penalty has been imposed on the applicant under the provisions invoked in the SCN and only grants immunity in excess of the penalty indicated therein; that the earlier SCN invoked Sections 76, 77(2) and 78 as it was a case of service tax charged, collected and retained without disclosing the same to the department with an intent to evade payment of service tax and the presence of elements of Section 78 has been discussed in detail in the SCN. He also submitted that the demand is not time barred and the notice has been issued well within the time limit prescribed under the statute, and therefore, the entire demand made in the SCN is sustainable. Findings and decision of the Bench : 5.1 The Bench has gone through the application and considered the oral and written submissions ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, on the ground of concealment of particulars of his duty liability then, he shall not be entitled to apply for settlement under Section 32E in relation to any other matter . An Explanation to the above clause was inserted with effect from 6-8-2014, which clarified concealment of particulars of duty liability as relating to any concealment made from the Central Excise Officer. Persual of the above provisions clearly indicate that any subsequent application by an applicant is barred if any penalty has been imposed on them on account of concealment of duty/tax liability from the jurisdictional officers. 5.6 On perusal of the earlier show cause notice dated 12-10-2012 pertaining to the previous case Final Order No. 46/2014-S.T., dated 20-10-2014, it is seen that the same was issued after investigation based on specific information that the applicant was collecting but not remitting service tax to the Government exchequer and consequent search of the applicant s premises followed by seizure of relevant documents/records. The allegation of non-payment of Service tax collected but not paid and non-disclosure of tax liability through S.T.-3 Returns was also accepted by the Gen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce and claimed that the balance demand pertaining to the previous period Oct 2012 to March 2013 is time barred. The Jurisdictional Commissioner has rightly pointed out that the show cause notice has been issued well within the due date of 25-10-2014 viz. on 10-10-2014 (within 18 months from the relevant date viz. 25-4-2013), being the due date for filing ST3 Return for the period (October 2012-March 2013). The applicant s Counsel during the hearing admitted service tax liability for which they earlier assailed on ground of time bar, however, he sought six months time to pay the same. There is no such provision available in the Act to grant time to pay the additional accepted liability. The Bench notes that though the SCN was issued well within the time limit as specified in the statute, the applicant has only made a partial admission of their liability at the time of filing application and has come forward to admit the balance amount without paying the same along with applicable interest. Thus, the Bench holds that the applicant has not made a true and full disclosure of their liability before the Commission which is a pre-requisite for entertaining the application. In any case, as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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