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Judgment
R. Sudhakar, J.
Aggrieved by the order of the Appellate Tribunal in dismissing the appeal filed by it, the Revenue is before this Court challenging the said order by filing the present appeal. This Court, vide order dated 21.07.09, framed the following substantial questions of law for consideration:-
"1) Whether in the facts and circumstances of the case, the Tribunal was right in deleting the penalty imposed under Section 76 of the Finance Act, 1994 giving benefit under Section 80 of the Act, when the service provider has realized the value of the service along with the service tax payable thereon from the service receiver but did not remit the service tax to the Government?
2) Whether in the facts and circumstances of the case, the Tribunal is right that since because the service tax has been paid before the issuance of the show cause notice, the service provider is not liable for penalty under Section 76 of the Act?"
The respondent assessee is a travel agent and in the course of inspection on 3.6.04, the respondent found that the appellant commenced business in August, 2003 but they had not paid service tax payable in terms of Finance Act, 1994. At the time of enquiry proceedings itself, the assessee paid the entire service tax liability, that too, even before the issuance of show cause notice on 27.10.04. However, the show cause notice, besides demanding duty, proposed levy of interest under Section 75, penalty under Sections 75-A, 76 and 77 of the Finance Act, 1944. The case was agitated and order was passed imposing penalty of Rs. 500/- under Section 75-A, penalty of Rs. 200/- per day under Section 76 and Rs. 2000/- under Section 77 were levied. Aggrieved by the said order, the assessee preferred appeal before the Commissioner (Appeals).
In the said appeal, the penalty under Section 77 was reduced to Rs. 1000/- from Rs. 2000/- and penalty of Rs. 500/- under Section 75 was confirmed. In respect of penalty of Rs. 200/- per day levied under Section 76, the same was reduced to Rs. 100/- per day.
Aggrieved by the said order, appeal was filed before the Tribunal by the assessee only with regard to the penalty of Rs. 100/- per day levied under Section 76 of the Act. The Tribunal, taking note of the decision of the Tribunal in (2008) 14 STJ 181 and R.Sukumar - Vs -Commissioner of Central Excise, Trichy 2008 (11) STR 118 (Tri - Chennai)), came to hold that the rigors of penalty under Section 76 is much lesser than the case of penalty under Section 78. There is no allegation of fraud or collusion in the present case and, therefore, invoking the provisions of Section 80, penalty under Section 76 was set aside, primarily on the ground that the entire amount of service tax was paid prior to issuance of show cause notice. The Tribunal was also of the view that since no appeal was filed against the order passed in Akbar''s case (supra), the single member Bench decided the issue in favour of the assessee against which the present appeal has been preferred before this Court by the Revenue.
Heard Mr. K.Rajasekar, learned standing counsel appearing for the appellant and Mr.C.Venkataraman, learned counsel appearing for the first respondent.
Sections 76, 78 and 80 of Finance Act, 1994, which are pertinent to the case on hand, are set out hereunder for better clarity :-
"76. Penalty for failure to pay service tax--
Any person, liable to pay service tax in accordance with the provisions of section 68 or the rules made under this Chapter, who fails to pay such tax, shall pay, in addition to such tax and the interest on that tax amount in accordance with the provisions of section 75, a penalty which shall not be less than [one hundred rupees] for every day during which such failure continues or at the rate of [two per cent.] of such tax, per month, whichever is higher, higher, starting with the first day after the due date till the date of actual payment of the outstanding amount of service tax:
Provided that the total amount of the penalty payable in terms of this section shall not exceed the service tax payable in terms of this section shall not exceed [fifty per cent of] the service tax payable.
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Penalty for suppressing value of taxable service. -
4[(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 -
(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 be equal to the amount of service tax so not levied or paid or short-levied or short-paid or erroneously refunded:
Provided that where true and complete details of the transactions are available in the specified records, penalty shall be reduced to fifty per cent of the service tax so not levied or paid or short-levied or short-paid or erroneously refunded:
Provided further that where such service tax and the interest payable thereon is paid within thirty days from the date of communication of order of the Central Excise Officer determining such service tax, the amount of penalty liable to be paid by such person under the first proviso shall be twenty-five per cent of such service tax:
Provided also that the benefit of reduced penalty under the second proviso shall be available only if the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso:
Provided also that in case of a service provider whose value of taxable services does not exceed sixty lakh rupees during any of the years covered by the notice or during the last preceding financial year, the period of thirty days shall be extended to ninety days.
(2) Where the service tax determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, then, for the purposes of this section, the service tax as reduced or increased, as the case may be, shall be taken into account:
Provided that in case where the service tax to be payable is increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, then, the benefit of reduced penalty under the second proviso to sub- section (1), shall be available, if the amount of service tax so increased, the interest payable thereon and twenty-five per cent of the consequential increase of penalty have also been paid within thirty days or ninety days, as the case may be, of communication of the order by which such increase in service tax takes effect:
Provided further that if the penalty is payable under this section, the provisions of section 76 shall not apply.
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Penalty not to be imposed in certain cases. - 2(1) Notwithstanding anything contained in the provisions of section 76 3[section 77 or [first proviso to sub- section (1) of section 78]], no penalty shall be imposable on the assessee for any failure referred to in said provisions, if the assessee proves that there was reasonable cause for the said failure.
"(2) Notwithstanding anything contained in the provisions of section 76 or section 77 or section 78, no penalty shall be imposable for failure to pay service tax payable, as on the 6th day of March, 2012, on the taxable service referred to in sub-clause (zzzz) of clause (105) of section 65, subject to the condition that the amount of service tax along with interest is paid in full within a period of six months from the date on which the Finance Bill, 2012 receives the assent of the President."
A careful perusal of the order of the Tribunal would reveal that ''Reasonable cause'' as provided under Section 80 of the Act has been recorded by the Tribunal stating that the respondent assessee had fallen into financial crisis on account of the criminal breach of trust committed by their sub-agent and criminal proceedings were initiated against such persons and the same are pending. In addition to the above, the Tribunal also came to hold that it is a case of payment of duty voluntarily at the time of investigation even prior to issuance of show cause notice. Therefore, the Tribunal went on to invoke the provisions of Section 80 of the Act on the ground of reasonable cause.
On a careful consideration of the documents as submitted by parties and also on a careful perusal of the reasoning of the Tribunal, this Court finds that the reasoning of the Tribunal is based on parameters of Section 80 of the Act and, therefore, this Court finds no necessity to interdict the decision of the Tribunal granting relief to the petitioner under Section 76 of the Act by invoking the provisions of Section 80 of the Act. In such view of the matter, the first substantial question of law is answered in favour of the assessee and against the Revenue.
In view of the answer in favour of the assessee in respect of the first substantial question of law, the second question of law becomes academic and the same is not dealt with.
Finding no merits warranting interference with the order of the Tribunal, the appeal is dismissed. However, there shall be no order as to costs.