10.1 I confirm the demand of Rs.13,36,869/- (Rupees thirteen lakhs thirty six thousand eight hundred and sixty nine only), being the service tax payable by the assessee during the period from April 2008 to December 2009, under Section 73(2) of the Finance Act, 1994. 10.2 I order recovery of interest at the appropriate rates payable on the tax amount mentioned at 10.1 above from the assessee under Section 75 of the Finance Act, 1994.
10.3 I order appropriation of Rs.13,36,869/- paid by the assessee vide challans dated 31.12.09, 06.01.10, 07.01.10, 11.01.10, 19.02.10 and 27.03.2012 (amounting to Rs.12,65,303/-) and in cenvat account (Rs.71,566/-), towards the demand at para 10.1 above.
10.4 I order appropriation of Rs.1,00,820/- paid vide challans dated 31.12.09, 06.01.10, 07.01.10, 11.01.10, 19.02.10, and 27.03.2012 towards the interest payable as per para 10.2 above.
10.5 I further order appropriation of Rs.1,00,820/- paid by the assessee vide challans No.1022 dated 25.04.12 and 0031 dt. 27.04.12 towards interest for the belated payment of Service tax for the period from May 2007 to March 2008.
10.6 I impose a penalty of Rs.13,36,869/- (Rupees Thirteen lakhs thirty six thousand eight hundred and sixty nine only) under Section 78 of the Finance Act, 1994 on M/s.GE Infotech Pvt. Ltd. However, the penalty amount shall stand reduced to 25% of the said amount, if the same is paid within thirty days from the date of communication of this order in terms of proviso to Section 78 of the Finance Act, 1994.
10.7 I drop the penal proceedings initiated under Sec.76 and 77 of the Finance Act, 1994.
18. The appellant reiterated the same grounds before the Commissioner of Central Excise (Appeals) and the Commissioner upheld the orders of the Additional Commissioner in toto and aggrieved against the same, the appellant appealed before the CESTAT and by citing various decisions, raised the ground that if duty is paid before the issue of Show Cause Notice, no penalty and interest can be levied.
19. The CESTAT passed the impugned order on 28.10.2006 dismissing the appeal by holding that it is not in dispute that the appellant paid short-payment after being pointed out, however, they charged and collected service tax, which they have not remitted to the Government Exchequer and further, short payments were not made in one go, but over a period of four months. Challenging the same, the appellant is before this Court.
20. The point to be decided in the present appeal is whether the Show Cause Notice dated 29.09.2010 and the Order-in-Original dated 04.05.2012, wherein the Additional Commissioner reduced the penalty to 25% of the imposed penalty of Rs.13,36,869/-, if the same is paid within 30 days, which came to be confirmed by the order impugned in the present appeal, are sustainable.
21. As per Section 68 of the Finance Act, 1994, read with Rule 6(1) of the Service Tax Rules, 1994, service tax shall be paid to the credit of the Central Government by the:-
(i) 6th day of the month, if the duty / service tax is deposited electronically through internet banking; and
(ii) 5th day of the month, in any other case, immediately following the calendar month, in which, the payments are received, towards the value of taxable services:
Provided that where the assessee is an individual or proprietary firm or partnership firm, Service Tax shall be paid to the credit of the Central Government by the 6th day of the month, if the duty is deposited electronically through internet banking, or, in any other case, the 5th day of the month as the case may be, immediately following the quarter in which the payments are received, towards the value of the taxable services. In respect of payments received for the month of March or the quarter ending in March, as the case may be, Service Tax shall be paid to the credit of the Central Government by the 31st day of March of the calendar year. Any failure on the part of the service provider in adhering to the dates prescribed for the payment of Service Tax to the credit of Central Government shall attract interest clause under Section 75 and penal provisions under Section 76 of the Finance Act, 1994.
22. From the perusal of records, it is seen that the appellant had contravened the above said provisions and short- paid the interest for the earlier period also. The appellant has collected the tax amount from their customers, but had not paid the same to the Government Exchequer and only after pointing out by the Audit authorities, they have paid Service Tax vide five challans dated 31.12.2009, 06.01.2010, 07.01.2010, 01.01.2010 and 19.02.2010 along with Rs.1,72,273/- towards interest and a sum of Rs.71,566/- through utilization of CENVAT Credit towards their service tax dues.
23. Moreover, though the appellant has collected the service charges along with the service tax amount during the period April 2008 to December 2009, appellant had not deposited such service tax into the Government Exchequer in time nor had intimated the department the details of such receipts in their ST3 Returns filed during the material period, which is not disputed by the appellant herein. Therefore, the appellant has contravened Section 70 of the Finance Act,1994 read with Rule 7 of Service Tax Rules, 1994.
24. From the foregoing, it is clear that the appellant has intentionally suppressed the service tax collected from its customers and failed to remit the same in the Central Government's Account for the period 2008-09, with an intention to evade payment of tax.
25. On perusal of records, it is seen that the categorical and undisputed facts are that having collected service tax from its customers, the appellant failed to remit the same in the Central Government's Account for the period 2008-09, but during the Audit, they pleaded that due to financial crisis, they were not in a position to pay the tax within the prescribed due dates. From which, it is clear that the appellant has intentionally failed to remit the service tax amount of Rs.13,36,869/- collected from the customers into the Central Government Account for the year 2008-2009. Whatever reasons stated in the appeal before the authorities, the fact remains that the appellant has failed to remit the said tax into the Central Government Account that too, when the statute mandates such remittance within the specified period, the question of pleading paucity of funds or financial problem in the company, cannot be accepted. Having received the service tax from their customers, the moment such amount was received, the person who receives such amount, as a custodian of the Government amount, ought to have remitted the same in the Government Account and he is not expected to utilize the same for his own purpose or business and later on plead that due to paucity of funds, they were not able to remit the same before the authorities, that too, only when the authorities have found that the appellant had escaped their liability of remitting, which, in the opinion of this Court, amounts to suppression of facts. Hence, the act of the authorities in issuing Show Cause Notice on such non-remittance, is found correct and supported by the strength of such provisions under which the Show Cause Notice was issued.
26. Further, in the Order-in-Original, the Additional Commissioner, only on the fact that the appellant herein have made payments during different periods within a span of four months that too, after the audit conducted by the Officers of the Internal Audit, Commissionerate of Chennai, had taken a lenient view by reducing the penalty to 25% of the imposed penalty amount of Rs.13,36,869/- if the same is paid within 30 days. The Additional Commissioner has used his discretionary power, which he is empowered under Section 78 of the Act, which reads as under:-
Penalty for failure to pay service tax for reasons of fraud, etc. 78. (1) Where any service tax has not been levied or paid, or has been short-levied or short-paid, or erroneously refunded, by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of this Chapter or of the rules made thereunder with the intent to evade payment of service tax, the person who has been served notice under the proviso to sub-section (1) of section 73 shall, in addition to the service tax and interest specified in the notice, be also liable to pay a penalty which shall be equal to hundred per cent of the amount of such service tax:
Provided that in respect of the cases, where the details relating to such transactions are recorded in the specified record for the period beginning with the 8th April, 2011 upto the date on which the Finance Bill, 2015 receives the assent of the President (both Days inclusive), the penalty shall be fifty per cent of the service tax so determined..
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..
Explanation.-For the purposes of this sub-section, specified records means records including computerised date as are required to be maintained by an assessee 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 Tribunal or the court, as the case may be, modifies the amount of service tax determined under sub-section (2) to section 73, then the amount of penalty payable under sub-section (1) and the interest payable thereon under section 75 shall stand modified accordingly, and after taking into account the amount of service tax so modified, the person who is liable to pay such amount of service tax, shall also be liable to pay the amount of penalty and interest so modified.
(3) Where the amount of service tax or penalty is increased by the Commissioner (Appeals), the Appellate Tribunal or the court, as the case may be, over and above the amount as determined under sub-section (2) of section 73, the time within which the interest and the reduced penalty is payable under clause (ii) of the second proviso to sub-section (1) in relation to such increased amount of service tax shall be counted from the date of the order of the Commissioner (Appeals), the Appellate Tribunal or the court, as the case may be..
. Insertion of transition provision by way of section 78B After section 78A of the 1994 Act, the following section shall be inserted, namely:-
Transitory provisions 78B. (1) Where, in any case,--
(a) service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded and no notice has been served under sub-section (1) of section 73 or under the proviso thereto, before the date on which the Finance Bill, 2015 receives the assent of the President; or
(b) service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded and a notice has been served under sub-section (1) of section 73 or under the proviso thereto, but no order has been passed under sub-section (2) of section 73, before the date on which the Finance Bill, 2015 receives the assent of the President, then, in respect of such cases, the provisions of section 76 or section 78, as the case may be, as amended by the Finance Act, 2015 shall be applicable.
(2) In cases where show cause notice has been issued under sub-section (1) of section 73 or under the proviso thereto, but no order has been passed under sub-section (2) of section 73 before the date on which the Finance Bill, 2015 receives the assent of the President, the period of thirty days for the purpose of closure of proceedings on the payment of service tax and interest under clause (i) of the proviso to sub-section (1) of section 76 or on the payment of service tax, interest and penalty under clause (i) of the second proviso to sub-section (1) of section 78, shall be counted from the date on which the Finance Bill, 2015 receives the assent of the President.
26. The reduction of penalty from the original amount to 25% is not contrary to the above Section and hence, it is valid. The appellant's suppression has been condoned to certain extent by the authorities and the same requires no modification. The grounds raised in this appeal have already been raised before the Additional Commissioner, Commissioner and the CESTAT. All the grounds have already been analysed by the Authorities below. It is needless to say, where suppression etc., is invoked, penalty is imposable under Section 78 of the Act. It is also evident that where Section 73(4) and Section 78 are involved, the Board's Circular and the case laws are not applicable, as rightly held by the Adjudicating Authority. Hence, the Civil Miscellaneous Appeal fails and accordingly, dismissed thereby confirming the orders passed by the authorities below. The appellant is directed to remit 25% of Rs.13,36,869/- within 30 days from the date of receipt of this order, failing which interest of 12% p.a should be levied till the date of payment. Consequently, connected Miscellaneous Petition is closed. No costs.