Sagar Enterprises Vs CST (CESTAT Mumbai)
Penalty under Section 76 is imposed for default in payment of tax and, no mensrea is required to be proved for imposing such penalty. For mere default and delay in payment of tax, the liability to penalty arises. The Hon’ble High Court of Kerala in the case of Asst. Commissioner of Central Excise v. Krishna Poduval – 2006 (1) S.T.R. 185 (Ker.) has held that penalty under Section 76 of the Finance Act, 1994 can be imposed for mere default/delay in payment of Service Tax in addition to the penalty under Section 78 and these penalties are mutually exclusive and even if offences are committed in the course of same transaction or arise out of same act, penalty is imposable for ingredients of both offences.
FULL TEXT OF THE CESTAT JUDGEMENT
This appeal is directed against the order in appeal No PD/STC-I/533/ 2014 dated 02.05.2014 of the Commissioner (Appeals) Central Excise Mumbai – I. By the impugned order Commissioner (Appeal) as upheld the order in original No 02/ST II/ADL/YKA/2010-11 dated 22.04.2010 of the Additional Commissioner Service Tax Mumbai II holdings as follows:
“In view of the above, I confirm the Service Tax amounting to Rs 14,86,779/- (Rupees Fourteen lakhs eighty six thousand seven hundred and seventy nine only) under Section 73(2) of the Act. The interest at applicable rate is confirmed under Sec 75 of the Act.
I impose penalty of Rs 500/- under Sec 75A of the Act.
I impose penalty of Rs 100/- per day till the payment of service tax under Sec 76 of the Act. However, the penalty should not exceed the service tax confirmed as above.
I impose penalty of Rs 1000/- under Sec 77 of the Act.
I impose penalty of Rs 14,86,779/- under Sec 78 of the Act.”
2.1 Acting on the intelligence that appellants are depot keepers/ depot agent providing taxable services under the category of “Clearing and Forwarding Agents Services”, to various yarn manufacturing mills, without obtaining registration and payment of service tax, investigations were undertaken by the department.
2.2 After completion of investigations a show cause notice dated 20.05.2004 was issued to the appellants asking them to show cause as to why;-
(i) The service tax amounting to Rs 14,86,779/- (Rupees Fourteen lakhs eighty six thousand seven hundred and seventy nine only) leviable on the consideration/ commission/ remuneration amounting to Rs 2,82,57,464/- received by tem during the period Sept 99 to Sept 2003 should not be recovered from them under Section 68 of the Act and Rule 6 of the Rules read with Section 73(1)(a) of the Act;
(ii) The interest, as applicable should not be recovered from them for nonpayment of their dues within the period prescribed under Section 75 of the Act;
(iii) Penalty should not be imposed under Section 75A of the Act read with Rule 4 of the Service Tax Rules for failure to make an application to the concerned Superintendent, Central Excise in form ST-1 for registration within the prescribed period;
(iv) Penalty should not be imposed for failure to pay service tax within the prescribed period under Section 76 of the Act.
(v) Penalty should not be imposed on them for failure to furnish prescribed returns for the period Sept 99 to Sept 2003 under Section 77 of the Act.
(vi) Penalty should not be imposed on them under Section 78 of the Act for deliberately concealing/ suppressing the value of taxable service with intent of evading service tax.
2.3 The show cause notice was adjudicated by the Additional Commissioner as per the order in original referred in para 1 above. Aggrieved by the order of Additional Commissioner, Appellants preferred the appeal before Commissioner (Appeal).
2.4 The appeal filed by the Appellants was dismissed by the Commissioner (Appeal) as per the impugned order referred in para 1, supra. Aggrieved by the dismissal of appeal, appellants have preferred this appeal before the tribunal.
3.1 In their appeal, appellants have assailed the impugned order stating that-
(i) It is nonspeaking and non reasoned order, passed n casual, cursory and perfunctory manner without considering and dealing with the submissions made by them;
(ii) The activities undertaken by them do not fall within the ambit of the clearing and forwarding activities. Both Additional Commissioner and Commissioner (Appeal) have without considering the submissions made by them, proceeded to confirm the demand against them.
(iii) They provide the services as depot agents to their principals and are not covered by the definition of Clearing and Forwarding Agent as provided by Section 65(25) of the Finance Act, 1994. As per the definition, if a person appointed as an agent is undertaking the activity involving receipt, storage and sale of goods on behalf of the principal then only such agent is a Clearing and Forwarding agent.
(iv) As they have not undertaken any activity of clearance of goods either from the premises of the principals or from the depot/godown they will not be covered by the definition of Clearing and Forwarding agent. The remuneration received for unloading and transporting the goods from the railway station or any other place where the goods are unloaded from the carrier to the warehouse would not be covered in the meaning of services rendered by a clearing and forwarding
(v) The warehousing of the goods does not come under either clearing operation or forwarding However a clearing and forwarding agent may render the warehousing services as a ancillary operation.
(vi) Further the definition of clearing and forwarding agent includes consignment agent. At the same time, the taxable service has been defined to be “in relation to Clearing & Forwarding operations in any manner”. Therefore, only if a person acting as a consignment agent and rendering the services of in relation to Clearing & Forwarding operations would he be liable to pay service tax on such services provided by him.
(vii) The trade notice referred to by the Additional Commissioner is not applicable to present facts of case.
(viii) The issue on merits is covered by the decisions in following cases:-
> Kulcip Medicines (P) Ltd [2009 (14) STR 608 (P & H)]
> Mahavir Generics [2006 (3) STR 276 (T-Del)]
> VNSS Textiles [2010 (24) STR 385 (TChennai)]
> Parekh Apparels [2008 (09) STR 87 (T-Ahd)]
> Larsen & Tubro Ltd [2006 (3) STR 321 (T-LB)]
> United Plastometers [2008 (10) STR 229 (P & H)]
> Pondicherry Agro Services & Indus Corpn Ltd [2010 (17) STR 243 (T-Chennai)]
> Vijay Traders [2009 (16) STR (T-Bang)]
(ix) The demand is time barred as they were under a bonafide belief that they were not rendering any taxable service nor undertaking any operations as “Clearing and/ or Forwarding Agent”. For the preposition that the demand is barred by limitation, they rely on the following decisions:-
> Sunil Metal Corporation [2009 (16) STR 469 (T-Ahd)]
> Nirav Industries [2009 (16) STR 69 (T-Ahd)]
> Padam Chand Mutha & Co [2009 (16) STR 721 (T-Del)]
> Chemphar Drugs & Liniments [1989 (40) ELT 276 (SC)]
> Padmini Products [1989 (43) ELT 195 (SC)]
> Tamil Nadu Housing Board [1994 (74) ELT 9 (SC)]
> Cosmic Dye Chemical [1995 (75) ELT 721 (SC)]
> Pushpam Pharmaceutical Company [1995 (78) ELT 401 (SC)]
> Nexcus Computers 9P) Ltd [2008 (9) STR 34 (T-Ch en n a i)]
> Bharat Aluminium Co Ltd [2007 (8) STR 27 (T-Del)]
> NRC Ltd [2007 (5) STR 308 (T-Mum)]
(x) Penalties imposed on them under Section 75A, 76, 77 & 78 are not justified and maintainable in law. They rely on the following decisions:-
> Singh Brothers [2009 (14) STR 552 (T-Del)]
> Orient Packagings Ltd [2011 (23) STR 167 (T-Del)]
> P T Education & Training Services Ltd [2009 (14) STR 34 (T-Del)
> Motilal Padampat Sugar Mills Co Ltd [1979 (118) ITR 326 (SC)]
> Azadi Bachao Andolan {2001 (252) ITR 471 (SC)]
> Motor World [2012 (27) STR 225 (Kar)]
> City Motors [2010 (19) STR 486 (P&H)]
> Mohammad Mustikeen [2011 (22) STR 170 (T-Del)]
> Financial Software Systems Pvt Ltd [2014 (33) STR 393 (T-Chennai)]
> Jivant Enterprise [2012 (28) STR 582 (T-Ahd)]
4.1 We have heard Shri Vinay S Sejpal, Advocate for the appellant and Shri D M Shinde, Assistant Commissioner, Authorized Representative for the revenue.
4.2 Arguing for the appellants learned Advocated submitted that-
> Appellants are only the “Depot Agent” and not the consignment agents. They are undertaking only “Forwarding Operations” from the depot and are in no way concerned with the “Clearing Operations” which is carried out by the mill owners on the their own account and the goods are brought and delivered at the depot by them at their own cost and on their own.
> For categorizing the services rendered under the category of “clearing and forwarding services” it is essential that service should be that clearing and forwarding both. In case the service provider is not providing both the services of clearing and forwarding then the services rendered will not be classifiable under this category. As have been held in following decisions:-
