CESTAT, CHENNAI
BENCH
Habasit AG,
v.
Commissioner
of Central Excise,
P.G.
Chacko, Judicial Member
Final Order Nos.
911, 912/2007
In Appeal Nos.
S/61/2005 & S/62/2005
July 25, 2007
penalty
Section 80 of the Finance Act, 1994 - Penalty - Not to be imposed in
certain cases - Period from 1-4-2001 to 31-3-2003 - Whether plea of bona fide
belief, not supported by any cogent material, constitutes ‘reasonable cause’
for failure of an assessee to pay service tax - Held, no - Whether where
appellants did not get themselves registered between 20-9-2004 and 20-10-2004,
they could not claim exoneration from penal liability for sole reason that they
had paid up tax amount prior to 30-10-2004, date of expiry of Extraordinary
Taxpayer Friendly Scheme introduced by Board - Held, yes [Para 4]
Circulars
and Notifications : Circular No. 137/39/2004/CX.4,
dated 20-9-2004
>> Facts
A Swiss company, rendered
services of online information and database access and/or retrieval services to
an Indian company. Since as per rule 2(1)(d)(iv) of the
Service-tax Rules, 1994 ‘person liable for paying service tax’ means the person
receiving taxable services in India, the lower authorities held that the Indian
company was liable to pay service tax for the said service received by it
inasmuch as the Swiss company did not have any office in India. Penalty of Rs. 10,000 was also imposed on the party. In the instant
appeal the appellants, i.e., the Swiss company and the Indian company
contended that they were entitled to the benefit of section 80 inasmuch as they
paid the entire amount of tax prior to 30-10-2004, the date of expiry of the
‘Extraordinary Tax Payer Friendly Scheme’ introduced by the Board through the
Circular No. 137/39/2004/CX4, dated 20-9-2004. They further contended that they
were entitled to exoneration from penal liability, as they were under a bona
fide belief that they were not liable to pay service tax on the
service-in-question.
>> Held
The benefit of section
80 cannot be claimed by an assessee who fails to prove that there was
reasonable cause for default of payment of service tax. The plea of bona fide belief, not supported by any
cogent material, does not constitute ‘reasonable cause’ for the failure of the
appellant to pay service tax. The appellants never claimed the benefit of the
Amnesty Scheme introduced by the Board. Even otherwise, that claim was intended
to give relief to those service-providers who had not got themselves registered
with the department. Such non-compliant service providers were enabled to get
themselves registered; file returns and discharge past liabilities towards
service tax and interest on or before 30-10-2004 and avoid penalty. When the
appellants got themselves registered with the department was not even
discernible from the records. They had not claimed that they got themselves
registered between 20-9-2004 and 20-10-2004. They could not claim exoneration
from penal liability for the sole reason that they had paid up the tax amount before
30-10-2004. Default of payment of service tax by the appellants was an admitted
fact. Hence, they could not resist penalties being imposed. However, in the
facts and circumstances of the case, the penalties were to be reduced by 50 per
cent. The impugned order was to be sustained with that modification and the
appeals were to be disposed of. [
>> Cases referred to
CCE v. Bharat
Security Services & Worker’s Cont. 2003 (3) STR 703 (Trib. -
S. Kandasami for the Appellant. B.L.
Meena for the Respondent.
nn