Subject:The assessee is engaged in providing commercial coaching and training services and therefore,
Referred Sections:
Section 35G of the Central Excise Act,
Section 83 of the Finance Act,
Section 73(1)
section 68 of the Act;
Section 95 of the Finance (No.2) Act
Section 66 of the Act;
Section 140 of the Finance Act,
Section 75 of the Act
section 66 of the Act
Section 140 of the Finance Act;”
Section 35E and 86 of the Finance Act,
Section 76 and 78 of the Finance Act,
Section 78.
Referred Cases / Judgments
M/s. Raval Trading Company vs. Commissioner of Service Tax
M/s. Bajaj Travels Limited vs. Commissioner of Service Tax
Commissioner of Central Excise v. M/s. Pannu Property Dealers
$~45
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Order: July 24, 2018
+ SERTA 20/2018, C.M. APPL. No. 29038-29039/2018
N & N CHOPRA CONSLTANTS PVT. LTD.
..... Appellant
Through: Mr. Karan Sachdev, Mr. Yogendra
Aldak, Mr. Kunal Kapoor, Advocates
versus
PRINCIPAL COMMISSIONER, GOODS & SERVICE TAX
&CENTRAL EXCISE,DELHI EAST
..... Respondent
Through: Mr. Harpreet Singh Senior Standing
Counsel
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE A. K. CHAWLA
ORDER
%
S. RAVINDRA BHAT, J. (ORAL)
The question which the assessee urges in this appeal under
Section 35G of the Central Excise Act, 1944, as made by virtue of
Section 83 of the Finance Act, 1994, is that the multiple penalties
imposed in the circumstances of the case were excessive.
The assessee is engaged in providing commercial coaching and
training services and therefore, he is subject to service tax levy under
the Finance Act, 1994. It was registered as a service tax assessee and
it appears to have not paid up his liability for the period 09.09.2004 to
31.03.2008, however, he filed its returns stating that there was no
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service tax liability. The Income Tax Search and Seizure proceedings
apparently triggered investigations by the Service Tax Authorities.
The Assesssee in these circumstances offered to pay service tax dues
and filed returns on 02.03.2009. In the meanwhile, a show cause
notice was issued on 23.06.2009. For a later period, the assessee again
approached the Service Tax Authorities, conceding its liability and
offering to pay up its dues. The show cause notice culminated in order
in original dated 06.01.2012. Besides the tax liability, the Learned
Commissioner (Adjudication), who adjudicated show cause notice,
ordered, imposing penalties. The relevant part of the extract of the
Commissioner's order reads as follows:
"ORDER
i. I confirm the demand of service tax amounting to
Rs.26,36,988/- (Rupees twenty nine lakh thirty six
thousand nine hundred eighty eight only) against the
assessee i.e. M/s. N.N. Chopra Consultant Pvt. Ltd. on
the value of taxable service amounting to
Rs.2,44,74,902/- under Commercial training and
Coaching Service and the same be recovered from them
under Section 73(1) read with section 68 of the Act;
ii. I confirm the demand of Cess amounting to Rs.58,740/-
(Rupees fifty eight thousand seven hundred forty only) on
the amount of service tax shown in para 70.1 against
them under Section 95 of the Finance (No.2) Act, 2004
read with Section 66 of the Act;
iii. I confirm the demand of SHEC amounting to Rs.29,370/-
(Rupees twenty nine thousand three hundred seventy
only) on the amount of service tax shown in para 70.1
against them under Section 140 of the Finance Act,
2007;
SERTA 20/2018 Page 2 of 5
iv. Interest at the appropriate rate on the above amounts is
also chargeable from them under Section 75 of the Act
on the aforesaid amount till the date of payment of the
service tax;
v. I confirm the demand of service tax amounting to
Rs.4,64,867/- (Rupees four lakh sixty four thousand eight
hundred sixty seven only) against the assessee i.e. M/s.
N&N Chopra Consultant Pvt. Ltd. on the value of taxable
service amounting to Rs.43,53,501/- under Business
Auxiliary Service and the same be recovered from them
under Section 73 (1) read with Section 68 of the Act;
vi. I confirm the demand of Cess amounting to Rs,8,165/-
(Rupees eight thousand one hundred sixty five only) on
the amount of service tax shown in para 70.5 against
them under Section 95 of the Finance (No.2) Act, 2004
read with section 66 of the Act;
vii. I confirm the demand of SHEC amounting to Rs.1,074/-
(Rupees one thousand and seventy four only) on the
amount of serviced tax shown in para 70.5 against them
under Section 140 of the Finance Act;"
The assessee's appeal to the Tribunal under Section 35E and 86
of the Finance Act, 1994, was rejected by the impugned order. The
Tribunal declined to interfere with the findings and penalties imposed
by the Commissioner rejecting the contention that in the
circumstances of the case, the contention about the excessive
imposition of penalties both under Section 76 and 78 of the Finance
Act, 1994. The appellant urges that the Tribunal fell into error, in
upholding the two penalties and relies upon the judgments in M/s.
Raval Trading Company vs. Commissioner of Service Tax 2016 (42)
STR 210 (Guj) and the decision of the Hon'ble Punjab & Haryana
SERTA 20/2018 Page 3 of 5
High Court-in the case of First Flight Courier Ltd. - 2011 (22) STR
622 (P&H) and Commissioner of Central Excise v. M/s. Pannu
Property Dealers, Ludhiana (STA No. 13 of 2010 decided on 12-7-
2010), 2011 (24) STR 173 (P&H). It is submitted that the appellant had
deposited the additional amount of Rs.5,06,270/- after the show cause
notice was issued and had paid Rs.34 lakhs prior to that. Given these
facts, he states that imposition of any penalty under Section 76 was
itself unjustified.
The facts of this case, in the opinion of this court, notes that the
assessee was aware about its service tax liability; despite this
knowledge, it filed its returns claiming that no liabilities were
attracted. When it smelt investigation and adverse orders, it
apparently approached the service tax authorities and deposited the
amounts which they were admittedly liable to pay. Such being the
case of foreknowledge, in the opinion of the court, itself is an
important factor that ought to have been and was taken into account
by the lower revenue authorities. Hence, foreknowledge lead to the
imposition of recovery of dues assessed as well as imposition of the
penalty under Section 78. The court is of the opinion that the
invocation of Section 78 cannot be faulted with having regard to the
facts of this case. Depositing the amount due, by the appellant, before
issuance of show cause notice per se does not absolve the appellant of
its responsibility to file the returns, since the option of imposing other
penalty under Section 76 was exercised. Being a matter of discretion,
its judicious exercise, is all that is in question. Having regard to the
fact of concurrent findings, we are of the opinion that the exercise of
SERTA 20/2018 Page 4 of 5
such discretion reserving imposition of Section 76 in the
circumstances, does not call for interference.
The appellant's contention with respect to retrospective effect
of the amendment of Section 78 (which makes the imposition of
penalties under Section 76 and 78 mutually exclusively) are
unsubstantial as this court in M/s. Bajaj Travels Limited vs.
Commissioner of Service Tax (CEAC 6/2009, decided on 03.08.2011)
2012 (25) STR 417 held that the amendments are prospective in
nature and cannot come to the aid of an assessee for past period.
In view of the aforesaid observations, the appeal filed by the
appellant is dismissed and disposed of as such.
S. RAVINDRA BHAT, J
A. K. CHAWLA, J
JULY 24, 2018
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