Case Law Details
Om Sai Fabricators Vs Commissioner of CE & ST (CESTAT Mumbai)
Conclusion: As appellant had not taken registration and had not filed ST-3 returns within the prescribed time, penalty imposed under Section 77 was justified.
Held: Appellant was liable to pay service tax of Rs.1,25,36,776.00 (Rupees one crore twenty five lakh thirty six thousand seven hundred seventy six only) during the period 2006-07 to 2008-09 under section 73(2) of the Finance Act, 1994. It was noted that the noticee was charging and collecting service tax from their clients on the taxable service provided but not depositing the same with the Government exchequer, therefore, investigations were initiated against the appellant. Appellant thus contravened the provisions of section 66, section 68, and section 70 of the Finance Act, 1994 read with rule 5, 6 & 7 of the Service Tax Rules, 1994 in as much as – they had failed to determine and pay the service tax due on the service rendered to their customers as per the provisions of section 66 and section 68 ibid read with rule 6 ibid they had failed to submit returns in the form ST 3 to the service tax department on due date as per the section 70 ibid read with rule 7 ibid; they had failed to maintain proper records under rule 5 ibid. It was held that the penalty was for statutory offence. Section 11AC was only a mechanism for computation and the quantum of penalty. It was stated that the consequences of fraud etc. relate to the extended period of limitation and the onus was on the revenue to establish that the extended period of limitation was applicable. Once that hurdle was crossed by the revenue, the assessee was exposed to penalty and the quantum of penalty was fixed. It was pointed out that prior to insertion of Section 11AC, Rule 173Q was in vogue in which no mens rea was provided for. It only stated “which he knows or has reason to believe”. The said clause referred to wilful action. What was inferentially provided in some respects in Rule 173Q, now stood explicitly provided in Section 11AC. Where the outer limit of penalty was fixed and the statute provided that it should not exceed a particular limit, that itself indicated scope for discretion but that was not the case here. The decision in Dharamendra Textile must, therefore, be understood to mean that though the application of Section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section was applicable in a case the concerned authority would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under sub-section (2) of Section 11A. That was what Dharamendra Textile decide. As appellant had not taken registration and had not filed ST-3 returns within the prescribed time, penalty imposed under Section 77 was justified. It was now settled law that once the tax was demandable the interest as prescribed by law would automatically follow.
FULL TEXT OF THE CESTAT MUMBAI ORDER
This appeal is directed against order in original No 51/AT(S-1)/COMMR/RGD/12-13 dated 16.11.2012 of the Commissioner Central Excise Raigad By the impugned order Commissioner held as follows:
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