CESTAT, Chennai Bench

Habasit AG, Switzerland

v.

Commissioner of Central Excise, Coimbatore

P.G. CHACKO, JUDICIAL MEMBER

FINAL ORDER NO. 911, 912 OF 2007

IN APPEAL NO: S/61/2005 & S/62/2005

JULY 25, 2007

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, does not constitute reasonable cause for failure of an assessee to pay service tax - Held, yes - 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 paid up tax amount prior to 30-10-2004, date of expiry of extra ordinary tax payer Friendly scheme introduced by board - Held, yes (Para 3)

Circulars & Notifications:-

Circular No. 137/39/2004/cx.4, dated 20-9-2004

FACTS

A Swiss Company, rendered services of online information & data base access and/or retrieval services to the 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 Circular No.137/39/2004/ CX.4 dated 20.9.2004 they further contended that 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 appellants to pay service tax. The appellant 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 yet 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 appellant 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 paid up the tax amount before 30.10.2004. Default of payment of service-tax by the appellants was an admitted facts. 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 percent. The impugned order was to the sustained with that modification and the appeals were to be disposed of. (Para 3)