TMI Blog2023 (12) TMI 854X X X X Extracts X X X X X X X X Extracts X X X X ..... se that the service tax has been paid subsequently with accrued interest even before the show cause notice has reached the review petitioner - Surprisingly, the Additional Commissioner has observed in his order that the service tax has not been paid. The show cause notice itself shows that there was a payment of service tax along with interest by the review petitioner. Therefore, the order of the Additional Commissioner is factually incorrect. This Court is of the considered opinion that a case is made out by the Review Petitioner RP No.384/2022 to pay a sum of Rs.2,50,000/- towards penalty proceedings initiated by the Department and put an end to the litigation. Revision petition disposed off. - THE HON'BLE MR. JUSTICE P.S. DINESH KUMAR And THE HON'BLE MR. JUSTICE V. SRISHANANDA FOR THE PETITIONER : SHRI. S.S. NAGANAND, SENIOR ADVOCATE A/W SHRI. VAIBAV M. IYENGAR, ADVOCATE FOR THE RESPONDENT : BY SHRI. JEEVAN J. NEERALGI, ADVOCATE ORDER The present Review Petition is filed by the appellant/ petitioner under Section 114 r/w Order XLVII Rule 1 of the Code of Civil Procedure r/w Section 35G of the Central Excise Act, 1944, seeking review of the O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposition of penalty under Sections 76, 77 and 78 of the Act. The show cause notice also mentioned that there was payment of service tax in a sum of Rs.10,12,433/- and interest in a sum of Rs.78,205/-. 7. The second show cause notice was also duly replied by the petitioner on 20.12.2008 explaining the delay in payment of service tax and petitioner further submitted that there was no suppression of material facts and requested the Department not to take the extreme step of levying penalty under Section 78 of the Act. However, without appreciating the explanation offered by the petitioner and without affording sufficient opportunity for the petitioner, learned Additional Commissioner of Service Tax decided the case ex parte and passed an Order in original vide C.No.IV/16/140/2008 ST Adj.20040/09 OIO No.141/2009 dated 30.10.2009. 8. In paragraph 9.3 of the said Order, learned Additional Commissioner of Service Tax has remarked that assessee has accepted the service tax liability and made payment of service tax and interest thereon before issuance of show cause notice. 9. Review Petitioner contended that, it is incorrect to state that evasion of service tax has come to the no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court decisions in the case of CCE., Mangalore Vs. Shree Krishna Pipe Industries 2004 (165) ELT 508 (Kar), CCE., Vs. Geneva Fine Punch Enclosures Ltd 2011 (267) ELT 481 (Kar), CCE., Vs. Powerica Ltd 2012 (276) ELT 302 (Kar) which have not been informed to the Court and these decisions have a bearing on the case and thus they constitute formidable ground for review which may be considered for the advancement of substantial cause of justice and thus in our respectful submission it is well within the power of this court to recall the order dated 11.02.2021 for fresh hearing or modify the order for advancement of substantial cause of justice. Respectfully, this Hon'ble Court is erred in holding that the present case has a distinguishable feature and hence the decision of this Hon'ble Court relied by the Petitioner were not applied to the facts of the case of the petitioner. This Hon'ble Court is incorrect in holding that the assessee suppressed the facts and made willful-mis-statement before the Assessing Officer and in those circumstances the benefit of section 74, 78 was not extended to it. There is no allegation of willful-mis-statement in the show cause notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause notice and this would show that there was no question of fraud, mis-representation or suppression of facts. The Petitioner has not suppressed the facts and not contravened the provisions of the Act and Rules, consequently the proviso to Section 73(1) of the Act is not applicable on the facts of the case of the Petitioner and the show cause notice issued is bad in law and liable to be quashed on the facts and circumstances of the case. The Petitioner is not liable to pay penalty under section 77 and 78 of the Act in view of reasonable cause as prescribed under section 80 of the Finance Act, 1994 on the facts and circumstances of the case. i. The Petitioner reproduced the provisions of section 80 of the Act as follows: Notwithstanding anything contained in the provisions of section 76, section 77 or section 78, no penalty shall be imposable on the assessee for any failure referred to in the said provisions, if the assessee proves that there was reasonable cause for the said failure. ii. The Petitioner has collected the service tax with delay from the KSFC and the Petitioner is liable to pay service tax only after receipt of the service tax. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty is paid even before the issue of show cause notice and the said fact is informed to the proper Officer, he shall not initiate any proceedings to recover the duty and interest, much leas for imposition of penalty. Therefore, the order imposing penalty is illegal. The Commissioner of Customs vs. Powerica Ltd. (22.09.2011 - KARHC) : MANU/KA/1230/2011 ii) CCE Vs. Galaxy Constructions Pvt Ltd 2017 (48) STR 37 (Bom). The issue before the Hon'ble Court was The question that fell for consideration before the Tribunal and also falls for consideration in this appeal is whether the assessee was liable to pay the penalty on the delayed payment of service tax, when the assessee had discharged the entire liability of payment of service tax and interest thereon before issue of show cause notice . The Hon'ble Court held that since no substantial question of law arises in this Central Excise Appeal, the same was dismissed. The authorities below failed to appreciate that the petitioner is not liable to pay penalty under section 78 of the Act a sum of Rs.10,12,433/- on the facts and circumstances of the case. a) The Petitioner has not suppressed the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question of determination under Section 73(2) of the Act does not arise. i) The Petitioner places reliance on the decision of this Hon'ble Court in the case of CCE., Vs. Geneva Fine Punch Enclosures Ltd 2011 (267) ELT 481 (Kar). The Hon'ble Court observed as follows: The determination of liability to pay duty is a condition precedent for imposing penalty. If after demand of duty if the assessee without contesting the claim voluntarily pays the duty and interest payable thereon for the delay in payment of duty on the stipulated day, the question of officer determining the duty payable would not arise. The Tribunal held that the entire duty and interest was paid voluntarily on being pointed out in the investigation, no case for imposing the penalty is made out. The Hon'ble Court also held that no substantial question of law involved in this appeal that arises for consideration. j) In the instance where there is no demand payable to that extent of service tax paid by the Petitioner the question of penalty proceedings does not survive. k) The Petitioner places reliance on the decision of this Hon'ble Court in the case of CCE., Mangalore Vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 78 of the Act shall be restricted to 25 percent i.e., a sum of Rs. 2,53,108/- on the facts and circumstances of the case. It is submitted that as substantial question of law has been answered by this Hon'ble Court, in our respectful view without taking note of the above submissions and the Petitioner case falls within order 47 rule 1, the Petitioner is preferring this review for the advancement of substantial cause of justice. 14. Sri S.S.Naganand, learned Senior Advocate representing the Review Petitioner by reiterating the grounds urged in the Review Petition, contended that the petitioner tried to lay hands on to the alleged letter issued by the KSFC, whereunder, KSFC having confirmed the payment of service charges whereby, there was an obligation on the part of the petitioner to pay the service taxes. But, despite best efforts made by the petitioner, no such correspondence has been traced by the petitioner company nor there was any payment made by the KSFC in time so as to fasten the liability on the petitioner in willfully evading the timely payment of service tax. 15. Sri S.S.Naganand, also contended that when once the service tax with interest i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2023. Relevant portion of the contents of the said affidavit is culled out herein for ready reference: 2. For purported delay in payment of service tax, a show cause notice was issued by the Commissionerate of Service Tax, Bengaluru proposing inter alia to levy a penalty under Section 76 of the Finance Act, 1994 for failure to pay service tax in time. Even before the said notice was issued, the Petitioner had paid service tax and education cess of Rs.10,12,433/-. By order dated 30.10.2009, the Adjudicating Authority appropriated the payment of Rs.10,12,433/- made by the Petitioner towards service tax and also appropriated Rs.78,205/- towards interest already paid by the Petitioner. In addition, penalties were imposed under Sections 76, 77, and 78 of the Finance Act amounting to Rs.10,12,433/-. The said order having been affirmed by the Commissioner of Central Excise Appeals, Hon'ble Customs, Excise and Service tax Appellate Tribunal and by this Hon'ble Court in C.E.A. No.21/2018, this review petition is filed. 3. It is pertinent to state herein that I am a senior citizen and in order to give a quietus to the dispute as I am a senior citizen, invoking the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppression of facts or contravention of any of the provisions of this chapter or of the rules made thereunder with intent to evade payment of service tax. The facts and circumstances established these ingredients in the case of the petitioner. Hence, the benefit of Section 73(3) of the Finance Act, 1994 are not available to the petitioner. In the instant case the petitioner after having collected the service tax did not remit the tax collected to the Department and did not file the statutory returns. Hence, the suppression on the part of the petitioner with an intent to evade service tax is quite evident from the conduct of the petitioner. 4. The Respondent submits that the Adjudicating Authority, Appellate Authority and this Hon'ble Court have taken all the factors in to consideration and passed the orders dismissing the claim of the petitioner. This Hon'ble Court was conscious of the legal position and discussed the statutory provisions in the Order under Review. 5. The Final Order of the CESTAT at paragraph 6.2 gives reasons why the penalty imposed by the Adjudicating Authority is sustainable and the same is confirmed by this Hon'ble Court in the Order under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner has placed before this Court the reply received by the Review Petitioner from KSFC along with memo dated 02.02.2023. The reply received by the Review Petitioner reads as under: To, Date:02.02.2023 Shri Niranjan V.K., 1049, Maria Arcade, Dr.Rajkumar Road, 4th M Block, Rajajinagar, Bengaluru-560 010. Sub: Information sought under RTI Act-2005 RTI application under Registration No.CCEBL/R/E/22/00093 dated 14.12.2022-Reg Please refer to the above. Your RTI Application was transferred to this office by the CPIO, PrCCO vide letter GCCO/RTI/APP/1377/2022-TECH dated 14.12.2022. 02. Attempt was made to elicit the information/record, sought by you vide your RTI Application, from the Anti-Evasion Section where the information was likely to be available. The Deputy Commissioner (Anti-Evasion Section) has reported that the letter dated 19.12.2007 sought vide your RTI Application could not be traced inspite of putting all out efforts. Further, an attempt was made with the Adjudication Section to obtain a copy of the said. It has been reported by the Adjudication Section that the Show Cause Notice referred in the RTI application issued to M/s LSG Sky Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to in Order XLVII Rule 1 for reviewing a judgment has been described as for any other sufficient reason . The said phrase has been explained to mean a reason sufficient on grounds, at least analogous to those specified in the rule (Refer: Chajju Ram v. Neki Ram, AIR 1922 PC 112, and Moran Mar Basselios Catholicos v. Most Rev. Mar Poulose Athanasius, 1955 SCR 520). 29. Keeping in mind the legal principles enunciated in the Madhusudhan Reddy, supra, when the material on record is analyzed in the instant case, it emerges that the Review Petitioner has sought for review of the Order in CEA No.21/2018 dated 11.02.2021, on the aforesaid grounds. 30. The principle ground on which the Review Petitioner is seeking for review of the Order in CEA No.21/2018 is that, the authorities have proceeded on the basis of the letter issued by KSFC whereby, KSFC said to have paid the service charges to 45 persons who have been employed by the Review Petitioner for carrying out internal audit work in KSFC and failed to pay the service tax. But, according to Review Petitioner, no such letter has been issued by KSFC as per the reply obtained by filing an application under Right to Inform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Provided further that where service tax and interest is paid within a period of thirty days of -- (i) the date of service of notice under the proviso to sub-section (1) of section 73, the penalty payable shall be fifteen per cent. of such service tax and proceedings in respect of such service tax, interest and penalty shall be deemed to be concluded; (ii) the date of receipt of the order of the Central Excise Officer determining the amount of service tax under sub-section (2) of section 73, the penalty payable shall be twenty-five per cent. of the service tax so determined: Provided also that the benefit of reduced penalty under the second proviso shall be available. only if the amount of such reduced penalty is also paid within such period. Explanation.-For the purposes of this sub-section, specified records means records including computerised date as are required to be maintained by an assesse in accordance with any law for the time being in force or where there is no such requirement, the invoices recorded by the assessee in the books of accounts shall be considered as the specified records. (2) Where the Commissioner (Appeals), the Appellate T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Section means by specified records. 36. In fact, it is the specific case of the Review Petitioner that the first show cause notice acknowledges the payment of service tax and the interest thereon and therefore, the Additional Commissioner of Service Taxes, at the first instance who passed the order in original ought not to have saddled 100% penalty on the Review Petitioner. The said aspect of the matter is ignored by subsequent authorities in the appeals filed by the Review Petitioner. Before this Court also, said aspect of the matter is not urged by the Review Petitioner, as he was not having the RP No.384/2022 knowledge that KSFC has not issued letter to Department that it had paid service charge to 45 persons, in time. 37. The order passed by the Additional Commissioner, which came up to this Court in CEA No.21/2018 and confirmed was based on the said letter issued by KSFC whereby, KSFC has categorically stated that entire service charges has been paid well in time and it is the default on the part of the review petitioner to pay the service tax in time. 38. The material on record would also disclose that the service tax has been paid subsequently with accrued i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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