KALSIS KITCHENETTE Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THIS application seeks waiver of pre -deposit and stay of recovery in respect of penalty amount of Rs. 5,03,703/ - which was imposed on the appellant under Section 78 of the Finance Act, 1994. During the period of dispute (10 -9 -2004 to 31 -3 -2007), the appellant had provided outdoor catering service to their clients, viz. The National Institute of Bank Management (NIBM) but did not pay service tax in respect of the catering charges received from NIBM. They were not even registered with the department as outdoor caterers. They obtained such registration only in March, 2007 and, that too, at the instance of the department. In a show -cause notice dated 4 -6 -2007, the department demanded service tax and Education Cess totaling to Rs. 5,03,703/ - from the appellant for the aforesaid period under Section 73(1) of the Finance Act, 1994. The noticee was also proposed to be penalised under the provisions of Sections 76, 77 and 78 of the Act. There was no reply to the show -cause notice. However, the appellant paid service tax along with education cess for the above period in five instalments from June, 2008 to July, 2009, i.e. after receipt of the show -cause notice. Interest on tax was also paid in like manner. The original authority, which adjudicated the case, noted these payments and appropriated the same to the aforesaid demand. It also imposed penalty of Rs. 5,03,703/ - on the party under Section 78 of the Act. No penalty was imposed under Sections 76 and 77. The appeal filed by the assessee for waiver of the above penalty imposed under Section 78 of the Act was dismissed by the Commissioner (Appeals). Hence the present appeal and the accompanying application.

(2.) THE learned Counsel for the appellant submits that they had believed bona fide that they were not liable to pay the above service tax. It is further submitted that the appellant had financial difficulties as they could not recover service tax from their clients. I have heard the learned SDR also, who has opposed the present application on the strength of the findings recorded by the lower authorities. After considering the submissions, I find that the conduct of the party did not disclose 'bona fides of belief. The appellant admitted that they were liable to pay service tax on outdoor catering services and, accordingly, got themselves registered with the department. However, they did not choose to pay service tax for the period of dispute. Even after receipt of the show -cause notice, they continued the default. It was only after more than one year since the receipt of the show -cause notice that they started paying service tax. It is also pertinent to note that the appellant did not care to reply to the show -cause notice. In the circumstances, the allegations raised in the show -cause notice for imposing penalty on the appellant under Section 78 of the Act should be considered to have been conceded. In other words, the penal liability under Section 78 of the Act is prima facie irresistible. In the appeal, the appellant has prayed for waiver of the penalty in terms of Section 80 of the Act. Prima facie, they have not made out any good cause for invoking Section 80. In the present application, there is no plea of financial hardships.