The assessee was registered with the Central Excise Department on its own on 16-6-2005. It was a proprietorship concern and it was required to file the service tax returns quarterly, which it had been filing meticulously with the Department. However, due to non-understanding of the relevant provisions of law, there was some short-payment of service tax during the period from August 2005 to October, 2006. However, when the said short payment was brought to the assessee’s notice in November, 2006 by the Visiting Departmental Officers, the entire amount of service tax was paid. However, it had not paid the interest for the period in question. It was the submission of the assessee that as the interest amount had not been directed to be paid, the same was not paid by it. It was difficult to accept such a proposition, as the calculation of interest is a simple process and ought to have been paid by it. However, the assessee fairly conceded that the interest liability was required to be discharged and it agreed to pay the said interest as due. From the conduct of the assessee, it was found that though there was a delay in making the payment of the service tax, but the same was not by way of suppression, misdeclaration etc., as the entire value of taxable services for the relevant period had been correctly shown in the balance sheet. Hence, it was difficult to accept that penalty would be imposable under section 78. However, there was a delay in payment of service tax, though not for a considerable period, but around a year and the short payment of service tax was made good on being pointed out by the Department. In the said circumstances, the penalty was imposable under section 76. Accordingly, it was held that the assessee was liable to penalty under section 76 only.
CESTAT, KOLKATA BENCH
Gemini Veterans Security & Vigilance
Commissioner of Service Tax, Kolkata
ORDER NO. A-83(KOL.) of 2012
Appeal No. ST/273 of 2010
FEBRUARY 10, 2012
1. This is an Appeal filed by the Appellant against the Order-in-Appeal No. 70/ST/2010 dated 31.03.2010. Briefly stated the facts of the case are that the Appellant had taken a Service Tax Registration on 16.06.2005. They have been paying the Service Tax and also filing ST-3 returns with the Department from time to time. On a visit of the Officers to their premises on 03.11.2006, it was noticed that certain amount of Service Tax though payable, was not paid by them during the aforesaid period. On being pointed out, the Appellant had discharged the entire Service Tax by the end of November 2006, as pointed out by the Officers. Later, a show cause notice dated 10.05.2007 was issued proposing penalty under Sections 76, 77 and 78 of the Finance Act. On adjudication, the Adjudicating Authority has imposed a penalty of Rs.4,97,999.00 under Section 78 of the said Act and also penalty @Rs.200.00 per day of delay under Section 76 of the said Act. The Appellant had disputed the imposition of penalties and accepted the Service Tax liability for the said period.
2. The learned Commissioner (Appeals) has recorded the finding that the Appellant had paid the entire amount of Service Tax and did not contest the Service Tax liability. However, on the aspect of imposition of penalty, he was not convinced with the arguments of the Appellant that the Service Tax could not be paid in time due to non-realization from their debtors and also due to paucity of fund. Consequently, he has upheld the Order passed by the lower Adjudicating Authority on imposition of penalty. Hence, this Appeal.
3. The learned Advocate appearing for the Appellant has categorically submitted that at no stage, they had disputed the quantum of the entire amount of Service Tax paid by them voluntarily after visit of the Officers to their premises. He also submitted that they had discharged the entire amount of Service Tax within a period of 30 days of the visit of Officers. There was no concealment whatsoever, on their part relating to the gross amount of taxable value; the same are correctly reflected in their Balance Sheet as charged to customers. He has submitted that the entire demand was within the normal period of limitation, even though the extended period of limitation had been invoked in the show cause notice. It is his submission that no facts relating to realization of the value of services provided had been concealed and suppressed from the knowledge of the Department, as the same were duly reflected in the Balance Sheet prepared by their Chartered Accountant. He has submitted that once they were registered with the Central Excise Department, the Department can direct them to produce any of the documents relating to the services rendered at any time. It is their bonafideness in reflecting the correct value of services received, in the Balance Sheet submitted to the Department. Hence there was no concealment on their part and accordingly, the ingredients of Section 78 are not satisfied in the case and accordingly, the same is not attracted. Further, he has submitted that in view of the specific provisions contained in Section 73 (3) of the Finance Act 1994, since the entire amount of Service Tax had been paid before issuance of the show cause notice, no show cause notice ought to have been issued to them. On a query from the Bench, he has fairly conceded that no interest was paid by them till date. He has placed reliance on the judgement in the case of Dixit Security & Investigation(P.) Ltd. v. CST  32 STT 121/12 taxmann.com 151 (Ahd.-Cestat). He has specifically referred to para 5 of the said judgement which, according to him, is comparable to the facts of the present case and consequently, no penalty is imposable on them, as theirs is a fit case to invoke Section 80 of the Finance Act, 1994.
4. Per contra, learned A.R. for the Revenue reiterates the findings of the learned Commissioner (Appeals). He has submitted that the Appellant, though had taken the Registration on 16.06.2005, but failed to discharge the Service Tax liability correctly, till it was pointed out to them by the Department. Further, he has submitted that they were operating their services from some unregistered premises, which were not disclosed to the Department. However, he fairly concedes that the gross taxable value received from the business of the said services, had been duly reflected in their Balance Sheet, irrespective of non-disclosure of the premises of rendering the services. He has referred to the decision of the Hon’ble Kerala High Court in the case of Asstt. CIT v. Krishna Poduval  3 STT 96 (Ker.).
5. Heard both sides and perused the records. The Appellant were registered with the Central Excise Department on their own on 16.06.2005. Theirs is a proprietorship concern and they are required to file the Service Tax Returns quarterly, which they have been filing meticulously with the Department. However, due to non-understanding of the relevant provisions of law, there was some short payment of Service Tax during the period from August, 2005 to October, 2006. However, when the said short payment was brought to their notice in November, 2006 by the Visiting Departmental Officers, the entire amount of Service Tax was paid. I find, however, they had not paid the interest for the period in question. It is the submission of the learned Advocate appearing for the Appellant that as the interest amount had not been directed to be paid, the same was not paid by them. It is difficult to accept such a proposition, as the calculation of interest is a simple process and ought to have been paid by them. However, the learned Advocate fairly concedes that the interest liability was required to be discharged and they agreed to pay the said interest as due. From the conduct of the Assessee, I find that though there was a delay in making the payment of the Service Tax, but the same was not by way of suppression, misdeclaration etc., as the entire value of taxable services for the relevant period has been correctly shown in the Balance Sheet. Hence, it is difficult to accept that penalty would be imposable under Section 78 of the Finance Act. However, I find that there was a delay in payment of Service Tax, though not for a considerable period, but around a year and the short payment of Service Tax was made good on being pointed out by the Department. In the said circumstances, I find that the penalty is imposable under Section 76 of the Finance Act. Accordingly, I hold that the Appellant are liable to penalty under Section 76 of the Finance Act, 1994 only. The Appeal is allowed in the above terms.