Provision under which the penalty was levied by the original adjudicating officer permits benefit of reduction in the penalty; subject to party paying the entire amount of tax determined interest and 25% of the penalty within 30 days of the communication of the order. As provision appears to be pari materia to Section 11AC and the order of Gujarat High Court in the case of Akash Fashion Prints (P) Ltd. followed by the Tribunal, in case of provision of Section 11AC of Central Excise Act, there is no infirmity in view adopted by the Tribunal. Revenue Appeal dismissed.
IN THE HIGH COURT OF GUJARAT
Tax Appeal No. 2560 of 2010
COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, SURAT- 1
M/s. S G MUNDRA
Dated: May 4, 2011
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1. Substantial questions of law raised before this Court are as follows:-
(a) Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law in confirming order of the Commissioner (Appeals) giving option to the respondent to deposit service tax, interest and @ 25% of service tax amount towards penalty, within 30 days from the receipt of the order of the Tribunal for availing benefit of reduced penalty under proviso to section 78 of the Finance Act, 1994?
(b) Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law in applying decision of the Tribunal in case of M/s. Swati Chemical Industries and decision of this Hon’ble Court in case of M/s. Akash Fashion Prints Pvt.Ltd. without recording comparative facts of the said cases and case of the respondent and recording findings thereon, for giving option to the respondent of reduced penalty?
(c)Whether the impugned order of the Tribunal can be said to be an order passed in accordance with law?
2. Assessee-respondent engaged in the business activity of providing services of Consultation was found to have evaded payment of Service Tax, and therefore, a show cause notice was issued demanding levying of service tax, interest and also proposing the imposition of penalty under section 78 of the Finance Act, 1994.
3. After due adjudication, the original adjudicating authority confirmed the demand of service tax, interest and penalty vide its order dated 29.02.2008.
4. Being aggrieved by the said order, the service provider respondent challenged the same before the Commissioner (Appeals) which reduced the amount of service tax as well as amount of interest and set aside the penalty under section 76 and 77 of the Finance Act. However, it re-determined the penalty imposition under section 78 and gave an option of payment at reduced rate of 25% of the duty confirmed within 30 days of receipt of the order.
5. The Department challenged the same before the Customs Excise & Service Tax Appellate Tribunal (CESTAT). The CESTAT after detailed hearing and discussion, adjudicated the issue on 29.6.2010, rejecting the appeal of Revenue. The impugned order is in challenge, proposing the aforementioned questions of law.
6. Heard learned counsel Mr. R.J.Oza appearing for the Department. He has taken this Court through the orders of adjudicating authorities below and the provisions of law in connection with present Appeal.
7. On careful examining the material and evidence, as well as the orders of the different authorities, this Court finds no error in the order passed by the Tribunal which has followed its own judgement in case of CCE Vadodara V/s. Swati Chemical Industries reported in 2009 (248) ELT 421 (Tri.Ahmd) and as also findings of this Court in case of Commissioner of Customs & Excise, Ahmedabad-I v. Akash Fashion Prints Private Limited, reported in 2009 (239) E.L.T 439 (Guj). It would be relevant to reproduce section 78 of the Finance Act, 1994:
“Where any service tax has not been levied or paid or has been short-levied 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, the person, liable to pay such service tax or erroneous refund, as determined under sub-section (2) of section 73, shall also be liable to pay a penalty, in addition to such service tax and interest thereon, if any, payable by him which shall not be less than, but which shall not exceed twice, the amount of service tax so not levied or paid or short-levied or short-paid or erroneously refunded”
8. This provision under which the penalty was levied by the original adjudicating officer permits benefit of reduction in the penalty; subject to party paying the entire amount of tax determined interest and 25% of the penalty within 30 days of the communication of the order. As provision appears to be pari materia to Section 11AC and the order of Gujarat High Court followed by the Tribunal, in case of provision of Section 11AC of Central Excise Act, there is no infirmity in view adopted by the Tribunal. With no question of law arising, this appeal deserves to be dismissed. Accordingly, this Tax Appeal is dismissed. No costs.