TMI Blog2023 (10) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... r following the process of natural justice that he recorded his findings, and the demand was confirmed. Scrutiny of the payments made against the demand alleged in the SCN is part of the quasi-judicial process prior to the issue of the order. The non receipt of service has not been disputed before us. Further it is also seen that the impugned order has pointed out discrepancies in the amounts claimed to have been debited towards duty from the credit account and that which was actually debited - This has also not been disputed by the appellant. This only goes to show that the scrutiny of payments claimed by the appellant is a part of the quasi-judicial process involved in the passing of the order in original and any discrepancies noticed and pointed out cannot be faulted. Levy of penalty - issuance of SCN - tax paid along with interest before the issuance of show-cause notice - Section 73(3) of the Finance Act 1994 - HELD THAT:- From a plain reading of the section 73 it is seen that nothing contained in sub-section (3) shall apply to a case where section 73 (4) applies. This is a case where the Original Authority has invoked the extended time limit under proviso to section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er in such cases and was duty bound to impose penalty equal to the duties so determined. The impugned order merits to be upheld and is so ordered - Appeal dismissed. - HON BLE SHRI P. DINESHA, MEMBER (JUDICIAL) AND HON BLE SHRI M. AJIT KUMAR, MEMBER (TECHNICAL) APPEARANCE: For the Appellant : Smt. Radhika Chandrasekar, Advocate For the Respondent : Shri M. Ambe, DC (AR) PER M. AJIT KUMAR, This appeal is filed by M/s. Kaveri Warehousing Pvt. Ltd. against Order-in-Original No. CHN. SVTAX-000-COM-041-13-14 dated 22.1.2014 (impugned order) passed by the Commissioner of Service Tax, Chennai. 2. Brief facts of the case are that the appellants are engaged in Storage and Warehousing Services and Goods Transport Operator Services. Based on investigations by officers of DGCEI, Chennai, it was noticed that the appellant had a centralized registration at Chennai for their various branches situated all over India. The appellants were collecting service tax for rendering Storage and Warehousing Services but did not pay service tax for the period from February 2009 to December 2009. The verification culminated into issue of Show Cause Notice dated 1.3.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings against such person who satisfies the provision of section 73(3) of the Finance Act, 1994. Further this is not merely a conclusion under sub-section (1), but conclusion of all proceeding against such person including those under sections 76, 77 and 78 of the Finance Act. The Hon ble Supreme Court in the case of Paper Products Ltd Vs. Commissioner of Central Excise (1999)7 SCC 84 has held that Circulars issued by the Board are binding on the Department. C. Without prejudice she submitted that in terms of Section 80, penalty cannot be imposed under Section 76, 77 and 78 if the Assessee proves that there was a reasonable cause for the said failure. The Appellant had not discharged service tax for the period February 2009 to December 2009 due to financial constraints. However, the moment the investigating authority pointed out the non-payment of service tax, the appellant had discharged the same along with interest. That the Madras High Court in the case of CST Vs. Lawson Travels (2014) TIOL 2295 has held that a careful perusal of the order of the Tribunal would reveal that 'reasonable cause' as provided under Section 80 of the Act has been recorded by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity after following the process of natural justice that he recorded his findings, and the demand was confirmed. Scrutiny of the payments made against the demand alleged in the SCN is part of the quasi-judicial process prior to the issue of the order. The question of eligibility of money deposits / CENVAT credits in the book of the appellant or claimed to having been paid, being appropriated or not is a part of the adjudicating authority s discretionary jurisdiction at this stage. Hence if he has come across credit payments made by the appellant that were found not legally subject to appropriation, or for any other reason, it was well within his discretion not to do the same. In this case the appellant was not found eligible to have availed the credit of Rs. 4,05,781/- as the service had not been received by the appellant. The non receipt of service has not been disputed before us. Further it is also seen that the impugned order has pointed out discrepancies in the amounts claimed to have been debited towards duty from the credit account and that which was actually debited as discussed at para 6.1 of the impugned order. This has also not been disputed by the appellant. This only go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vied or short-paid or erroneously refunded by reason of- (a) fraud; or (b) collusion; or (c) wilful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax. From a plain reading of the section 73 it is seen that nothing contained in sub-section (3) shall apply to a case where section 73 (4) applies. This is a case where the Original Authority has invoked the extended time limit under proviso to section 73(1) of the Finance Act 1994 for demand of service tax citing suppression of facts with an intention to evade payment of duty. The appellant has agreed that duty is payable for the entire period which was subsequently covered by the SCN and has paid a substantial part of the dues. Hence the payment of duty for the extended period, which is triggered by fraud, suppression etc, is not under challenge. This being so section 73 (4) applies in their case and they cannot seek protection under section 73 (3). The appellant has further referred to Boards letter F. No. 137/167/2006-CX4, Dated 3-10-2007, which is reproduced below. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 40625 of 2013 dated 07.03.2023, wherein it was held that, no Show Cause Notice is to be issued when the assessee has paid the Service Tax along with interest and no penalties are warranted under Section 77 and 78 of the Finance Act, 1994. B) C.C.E. Vs. Adecco Flexione Workforce Solutions Ltd. (2012) 26 STR 3 (Kar.) wherein it was held that payment of dues by the appellant shows his intention that they want to buy peace. Even before the interest could be paid the Department ought not to have issued a Show Cause Notice in the present case. C) YCH Logistics Vs. CCE Service Tax Appeal No. 886 of 2012 dated 13.03.2020 has held that Section 73(3) is very clear as it says that if a tax is paid along with interest before the issuance of show-cause notice, then in that case show-cause notice shall not be issued D) Sen Brothers Vs. CCE (2014) 33 STR 704 has held that it is thus evident from the aforesaid provisions that in the cases of non-payment of Service Tax on due dates, once payment along with interest is made before issuance of show cause notice, in such cases no show cause notice could be issued for imposition of penalty. We find that none of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved as the burden of proof is cast upon him. Not only have they not done so the circumstantial evidence also do not help establish their cause, for the following reasons: a) There was no confusion on legal issues or any dispute regarding the taxability of the service being provided by them. b) The duty that they were required to pay was tax collected from their clients / customers and was not to be paid from their own resources. Collecting tax from their customers (public money) and not depositing it to the government exchequer is breach of law and may be viewed as an embezzlement of public funds. c) After the introduction of the self-assessment regime in Service Tax, it is incumbent upon the assessee to make a truthful declaration of facts in their declarations, ST-3 returns etc. made to the department. Trust brings with it responsibility. d) The appellant filed their ST-3 Return for the period October 2008 to March 2009 and April 2009 to September 2009 on 08/07/2010 and October 2009 to March 2020 on 02/11/2010 i.e. only after the investigation initiated by officers of DGCEI, Chennai. In fact, if they genuinely faced a financial constraint and could not pay t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pending. In addition to the above, the Tribunal also came to hold that it is a case of payment of duty voluntarily at the time of investigation even prior to issuance of show cause notice. Therefore, the Tribunal went on to invoke the provisions of Section 80 of the Act on the ground of reasonable cause. The Court finds no cause to interfere with the order of the Tribunal. We find that the subjective satisfaction of the Tribunal was based on the facts of the case involving criminal breach of trust committed by their sub-agent where criminal proceedings were initiated and was upheld by the Hon ble Court. In this case the facts are different. Further it was for the appellant to prove financial constraint before the original authority and thereby plead reasonable cause for delayed payment while explaining the unused CENVAT credit lying in their books. The appellant has not done so. B) Daurala Organics Vs. CCE (2014) 35 STR 214 wherein it has been held that the benefit of Section 80 is not deniable even when extended period of limitation is invoked for demand of duty. This judgement pertains to a case where the Adjudicating Authority was of the view that the issue involved i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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