CESTAT,
VENKATRAMAN
ASSOCIATES
v.
Commissioner
of Service Tax
R. K.
Abichandani, President
T.K.
Jayaraman, Technical Member
Order No.
729/2007And
Service-tax
Stay Application No. 137 of 2007
In
service-tax Appeal No. 174 of 2007
September
10, 2007
Section 78 read with sections 84 and 86 of the Finance
Act, 1994 - Penalty - For suppressing value of taxable service - Period 2001 to
December 2004 - Assessee was providing services as architects - On
investigation revenue officers fond that assessee had short paid service tax
for period of dispute - Adjudicating authority taking a lenient view imposed
penalty of Rs. 20,000 on assessee under section 78 - However, Commissioner
reviewed said order and enhanced penalty imposed under section 78 to 90 lacs -
Whether when the adjudicating authority held that, section 78 was invokable and
imposed penalty under that provision Commissioner was perfectly justified in
exercising revisional powers under section 84 - Held, yes - Whether since it
was prima facie found that service tax was collected and not paid, nor
returns were filed and service tax was not paid as and when due, it was a
proper case for enhancing penalty under section 78 - Held, yes - Whether,
however, having regard to facts and circumstances of case assessee was to be
directed to pre-deposit part of penalty amount - Held, yes [Paras 4 and 6]
The assessee was providing services of architects. On
investigation revenue officers found that service tax was short paid by
assessee during period 2001 to December 2004. The adjudicating authority
relying upon the statement of the Manager of the assessee that the service tax
liability was not discharged because, the client had not paid the tax and that
there was no intention to evade payment of tax, took a lenient view, by
imposing a penalty only of Rs. 20,000 under section 78. However, the
Commissioner reviewed the order of the adjudicating authority and enhanced the
penalty imposed under section 78 to 90 lacs.
On application:
It was clear that by invoking section 78 for imposing
penalty of Rs. 20,000, the adjudicating authority proceeded on the footing that
the assessee had suppressed or concealed the value of the taxable services with
intent to evade payment of service tax. When the adjudicating authority held
that, section 78 was invokable and imposed penalty under that provision the
Commissioner was perfectly justified in exercising revisional powers under
section 84 in respect of the order of imposing penalty of only Rs. 20,000, when
the minimum prescribed under section 78, as it then stood, could not have been
less than the amount of service tax sought to be evaded and could have been
imposed upto twice the amount of the service tax sought to be evaded. [
The Commissioner exercising his revisional powers under
section 84 did not directly act under section 78. By virtue of the powers
conferred on him under section 84(1), the Commissioner was empowered to made
such order “as he thinks fit”, after calling for the record of the proceedings
under the said Chapter V of the Act under which the adjudicating authority
subordinate to him had passed any decision or order. The order made under
section 78 was an order passed by an authority subordinate to the Commissioner
and, therefore, he was empowered to call for the record and proceedings of that
order and revise the same by making such order thereon as he thought to be fit.
The Commissioner was, therefore, empowered to enhance the penalty by exercising
his powers under section 84 [
It transpired from the record that for the two crucial
half-yearly periods, returns were not filed nor was the tax paid. The statement
of the Manager of the, assessee who was looking after the Accounts and Finances
disclosed that service tax was charged from the customers that the assessee was
collecting service tax, but not paying it to the department and that the
returns were filed only upto September 2003, but they were not filed for the
half-year ending March 2004 and September 2004. In answer to another question,
it was stated by assessee that service tax was shown separately in the bills
and in some cases the fee was inclusive of the service tax. Thus, when, prima
facie, service tax was collected and not paid, nor were the returns filed and
service tax was not paid as and when due, this was a proper case for enhancing
penalty under section 78. However, having regard to the facts and circumstances
of the assessee was to be directed to deposit part of the penalty amount, and on such deposit there shall be waiver of the
remaining amount of penalty payable under the impugned order. [