TMI Blog2022 (8) TMI 472X X X X Extracts X X X X X X X X Extracts X X X X ..... service tax and recovery of the avoided service tax by the extended period of limitation under section 73 of the Act. The facts in the present case show that on issuance of the summons on 21/11/2007, the Chief Financial Officer appeared and gave his statement that the non payment of service tax on full value received by the branches, was not intentional, but due to system failure, and they immediately upon receipt of difference on the short payment, remitted the entire differential amount of service tax due to the government inclusive of interest. So they indirectly admit that service tax is due to the appellant from the respondent bank. The non payment of service tax was noted by the department only through the Intelligence report and when non-payment was informed to the respondent bank only, they paid the service tax due along with the interest. The assessee has not disclosed the value of taxable service for the period 10.9.2004 to 31.7.2007 in their ST 3 Returns filed to the department. Only when the department issued a show cause notice, the responded bank remitted the amount of tax. Hence, merely because they were exonerated under Section 80 of the Act from payment of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise, Customs and Service Tax adjudicated the issue and passed Annex.B Order-in-Original No.05 of 2009 ST demanding Rs. 5,45,61,022/for the period from 10.9.2004 to 31.7.07 under section 73(2) of the Finance Act 1994 (for short the Act ) and also imposed penalty under Sections 76 and 77 of the Act. Penalty sought to be imposed under section 78 of the Act was waived under section 80 of the Act. 3. Aggrieved by the final order of the Commissioner, Service Tax appeal was filed before the appellate Tribunal. The Tribunal, relying on various judgments of Tribunals and High courts, held us follows: 9.1 As far as issue number 2 and 3. Namely, service charges paid to foreign banks against the service received by the appellant bank, and service charges paid to Master Card International are concerned, we find that the said services fall in the definition of Import of Service and the same was made liable to service tax on reverse charge basis with effect from 18.4.2006 in view of the decision of the Bombay High Court in the case of Indian National Ship Owners Association v. Union Of India [2009 (13) STR 235 (Bomb.)], which was upheld by the Hon ble Apex court also and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the respondent in their statutory returns. 6. Heard the learned standing counsel Smt. Preetha S Nair for the appellant and Shri Kuryan Thomas for the respondent. 7. The main contention raised by the counsel for the appellant is that the Tribunal erred in finding that the extended period of limitation cannot be invoked and the entire period from 10.9.2004 to 31.7.2007 is barred by limitation. 8. For a proper understanding of the substantial questions of law raised in this appeal, the following Section is extracted, which reads as follows. SECTION 73. Recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded. (1) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, Central Excise Officer may, within thirty months from the relevant date, serve notice on the person chargeable with the service tax which has not been levied or paid or which has been short-levied or short-paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: Provided that where any service tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notwithstanding anything contained in the provisions of section 76 or section 77 or section 78, no penalty shall be imposable for failure to pay service tax payable, as on the 6th day of March, 2012, on the taxable service referred to in sub-clause (zzzz) of clause (105) of section 65, subject to the condition that the amount of service tax along with interest is paid in full within a period of six months from the date on which the Finance Bill, 2012 receives the assent of the President. Invoking the said section, the penalty imposed under Section 78 of the Act was waived. 12. When the matter reached the Tribunal, questions of invocation of extended period of limitation was an issue and the Tribunal found that when the Commissioner has dropped the penalty under section 78 by invoking Section 80 of the Act, there was no intention to evade payment of service tax and hence invocation of the extended period of limitation under 73 of the Act is not available to the department and hence, it was held that the entire period from 10.9.2004 to 31.7.2007 is barred by limitation. 13. The Counsel for the respondent bank submitted after the final order was passed by the Tribunal, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the failure. The important point to note is that while enacting section 80, Parliament introduced an overriding non-obstante provision which operates even in relation to the provisions of section 78. Consequently, the provision envisages that notwithstanding what is contained in section 78, it is open to an assessee to prove that there was a reasonable cause for the failure attributed in section 78. 16. The view which has found acceptance by the Tribunal in the present case is that once the extended period of limitation under section 73(1) has been applied, there can be no reasonable cause within the meaning of section 80. Now the circumstances which have been set out in the proviso to section 73(1) are indeed similar to those which are set out in section 78 for the imposition of a penalty. Not withstanding this, the Parliament did allow to the assessee an opportunity to establish that there was a reasonable cause of for the failure and this provision in section 80, as noted above, overrides section 78 as well by virtue of the non-obstante clause. The non-obstante provision of section 80 must obviously be given a meaning. If the view of the revenue, which was accepted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of limitation was also held to be bad. The department challenged the said finding before the High Court of Bombay in Rochem s case (supra). The Bombay High Court held that the finding was held to be legal as there was no misstatement or suppression on the question of payment of service tax was pending in litigation before various courts. 18. Section 80 of the Act starts with a non-obstante clause. According to the learned counsel for the appellant even though penalty under section 78 of the Act is waived invoking section 80 of the Act, if the assessee proves that there was reasonable cause for the failure of payment of service tax, the same yardstick cannot be brought into section 73(1) of the Act. Section 73(1) of the Act gives a right to the Central Excise Officer for the recovery of the service tax due. Exonerating the respondent from the payment of penalty under Section 78 of the Act, by invoking Section 80 of the Act will not absolve the Bank from payment of service tax and recovery of the avoided service tax by the extended period of limitation under section 73 of the Act. An inference drawn under Section 80 of the Act for waiving penalty is automatically applied f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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