TMI Blog2008 (7) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... question of law and facts. Hence, they are taken up together for disposal as per law. The Original Authority in each of the cases after due examination of the reasons given for failure to pay the Service Tax in time exercised his discretion in dropping the penalties and in some cases imposed lesser penalty. The Revisional Authority took up the matter and found that the non-imposition of penalty was not justified and so also imposition of lesser penalty. In each of the cases he has imposed the penalties and enhanced the same in terms of the impugned orders. 2. The learned Counsel submits that the issue is no longer res integra and that in identical matters pertaining to same type of service tax payers, the issue was examined by this Bench in 13 appeals in the case of Majestic Mobikes (P.) Ltd. v. CCE [2008] 16 STT 296 (Bang.-CESTAT) after due examination of the matter, similar orders were set aside and as a consequence penalties imposed were set aside. He produces a copy of this order. 3. The learned SDR submits that the issue requires a re-look as the Revisional Authority was justified in imposition of penalty or enhancing the same as the case may be in the light of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follows : ' 84. Revision of orders by the Commissioner of Central Excise (l) The Commissioner of Central Excise may call for the record of a proceeding under this Chapter in which an adjudicating authority subordinate to him has passed any decision or order and may make such inquiry or cause such inquiry to be made and, subject to the provisions of this Chapter, pass such order thereon as he thinks fit. (2) No order, which is prejudicial to the assessee shall be passed under this section unless the assessee has been given an opportunity of being heard. (3) The Commissioner of Central Excise shall communicate the order passed by him under sub-section (1) to the assessee, such adjudicating authority and the Board. (4) No order under this section shall be passed by the Commissioner of Central Excise in respect of any issue if an appeal against such is pending before the Commissioner of Central Excise (Appeals). (5) No order under this section shall be passed after the expiry of two years from the date on which the order sought to be revised has been passed.' 11.1 We would also like to reproduce section 73 of the Finance Act. '73. Recovery of servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the notice) and thereupon such person shall pay the amount so determined: ' Provided that where such person has paid the service tax in full together with interest and penalty under sub-section (1A), the proceedings in respect of such person and other persons to whom notices are served under sub-section (1) shall be deemed to be concluded: Provided further that where such person has paid service tax in part along with interest and penalty under sub-section (1A), the Central Excise Officer shall determine the amount of service tax or interest not being in excess of the amount partly due from such person.' (3) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person chargeable with the service tax, or the person to whom such tax refund has erroneously been made, may pay the amount of such service tax, chargeable or erroneously refunded, on the basis of his own ascertainment thereof, or on the basis of tax ascertained by a Central Excise Officer before service of notice on him under sub-section (1) in respect of such service tax, and inform the Central Excise Officer of such payment in writin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment thereof; (iii) in a case where any sum, relating to service tax, has erroneously been refunded, the date of such refund.' 12. For the first time service tax was introduced in India in the year 1994. Initially only three services were liable to service tax. Later gradually more and more services were brought under the tax net, with the result that at present there are more than 100 taxable services. The point to be appreciated is that the service tax Law in our country is evolving. In every budget, new categories of services are introduced. Many a time the service providers are not clear as to whether the service provided by them is taxable or not. The CBEC also issues circulars clarifying the law. Even at the time of introduction of the service tax, the Government of India emphasized the culture of voluntary compliance. In other words, the Government was against draconian provisions in practice. Even though some harsh provisions are in the statute book, a close reading of the various provisions indicate that the intention of the Government is not to impose heavy penalties in respect of service providers for various lapses. When they pay up the tax short-paid alon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of penalties. 14. In the Majestic Motor case, the appellants did not pay the service tax under the category of Business Auxiliary Service . However, when the lapse was pointed out, they paid the service tax even before the issue of show-cause notice. The Original Authority has made an observation however because of their action of making good, the payment immediately after pointing out by the departmental officers has diluted the offence committed by them . Here is a case where the reason given for non-payment is ignorance. When it was told that they are liable for tax, the tax along with interest was paid. The very action of the appellant has shown that he is ready to comply with the law. Under such circumstances, the Original Authority is of the view that waiver of penalties under sections 76 and 77 can be given in terms of section 80 and also imposition of a nominal penalty under section 78. In our view, the order of the Original Authority is well reasoned and is not at all arbitrary. The tax paid is to the tune of Rs. 6,68,945, whereas the penalty imposed by the Revisionary Authority is Rs. 10,00,000. It is very clear that imposition of such a huge penalty on an assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rule of law. According to us if such an Officer is entrusted with quasi-judicial duties, he will resort to arbitrary exercise of power, which will compel the victims to approach higher Tribunals for extricating them from the illegal orders. The predicament of such an Officer is quite evident from the fate of the appellant before us. This case on hand is a classic example of the vagaries of a Government servant who can misuse his powers. The Officer acted in an arbitrary and illegal manner in exercise of his so-called judicial powers.' 16. The appellant did not pay the service tax on account of ignorance of law. There is no intention to evade payment of duty. When such facts are on record, no further action on the part of the appellant to prove reasonable cause is warranted. What is reasonable cause? The Supreme Court in Motilal Padampat Sugar Mills Co. Ltd v. State of Uttar Pradesh [1979]118 ITR 326 held that 'it is well settled law that reasonable cause' can be reasonably said to be a cause which prevents a man of average intelligence and ordinary prudence acting under normal circumstances without negligence or inaction or want of bona fide. In all the cases de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered more or less in time and also started paying the service tax much before the new scheme became operational should be denied the benefit of waiver penal provisions....' It is also of interest to note that there is no provision of prosecution in respect of offences relating to service tax. In respect of all the cases excepting one under Serial No. 12 there was sufficient cause for non-payment of service tax in time. They are namely ignorance and bona fide belief. The moment the lapse was pointed out in all the cases except that in Serial No. 12, the tax and the interest was paid well before the issue of show-cause notice. Hence, in all the cases, in Serial Nos. 1 to 14 excepting Serial No. 12 we set aside the impugned order in revision and restore the order in Original. 18. As regards Serial No. 12 with regard to N.C.S. Storage System it is seen that the service tax was paid only after the issue of show-cause notice. In these circumstances, non-imposition of penalties under sections 76 and 78 is not justified. However, keeping in view the fact that the service tax was paid before the adjudication we reduce the penalty under section 78 to Rs 10,000. Otherwise we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of facts inasmuch as the assessee had not deposited the service tax and similar matter has been referred to Larger Bench and she prays for keeping the matter pending. The prayer of the learned DR to keep the matter pending is not accepted, as the issue has been dealt with in detail as noted in the cited order above. 7. I also find that in the case of Advance Securities, the Revisional Authority was satisfied with the reasonable cause furnished by the assessees in not depositing the tax in time. Therefore, the non-imposition of penalty in both the cases is justified. While in the case of other appeals, enhancing penalty by the Revisional Authority is not justified. Respectively following the ratio of the extracted order in the case of Majestic Mobikes (P.) Ltd. (supra) the impugned orders are set aside and appeals allowed with consequential relief. Appeal No. 228/2007 8. This appeal arises from Order-in-Appeal No. 347/2006-CE, dated 11-12-2006 by which duty has been confirmed as the assessee has not maintained separate accounts in respect of the goods manufactured by them carrying nil rate of duty and as well as rate of duty. The exemption available under Serial ..... X X X X Extracts X X X X X X X X Extracts X X X X
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