SUBIN TELECOM Vs. COMMR. OF C. EX., RAJKOT

JUDGEMENT

(1.) M /s. Subin Telecom (appellant) is engaged in providing services as authorized distributor of M/s. Vodafone Essar Gujarat Ltd. for the products of said company on commission basis since April 2007. Even though the appellant took registration as a service tax assessee for Business Auxiliary Service on 26 -4 -2007 itself, they did not pay the Service Tax nor did they file any return. On receipt of a letter from jurisdictional Central Excise authority dated 11 -2 -2008, requiring them to file return and produce records of books of accounts etc. for verification and subsequent recording statements of authorized persons, the appellants paid the Service Tax amount with interest as calculated and intimated to them. The payments were made on 8 -2 -2008. Proceedings were initiated which have culminated into impugned order -in -appeal, wherein the demand of Service Tax was reduced from Rs. 2,24,106/ - (Rupees Two Lakhs, Twenty Four Thousands, One Hundred and Six only) to Rs. 1,23,236/ - (Rupees One Lakh, Twenty Three Thousands Two Hundred and Thirty Six only) by extending the benefit of exemption Notification No. 6/2005 -S.T., dated 1 -3 -2005 as amended. Penalty imposed under Section 78 of Finance Act, 1994 has been upheld and penalties under Section 76 and 77 have been set aside. The appellant is in appeal against imposition of penalty under Section 78 of Finance Act, 1994. Revenue is in appeal against extension of benefit of exemption Notification No. 6/2005 -S.T.

(2.) HEARD both sides. The appellants have submitted that the appellant took registration as per the advice of the company, appointing them as a distributor. However, the appellant was not aware that they have to pay the Service Tax and also to file return. It is the submission of the appellant that as soon as they came to know that the department has collected the details of distributor from their principal; they made payment of Service Tax with interest on 8 -2 -2008, even though the range officer wrote to them on 11 -2 -2008. It was submitted that there were several decisions of the Tribunal, taking a view in such cases that no penalty under Section 78 is imposable and reliance has been placed on the decision of the Tribunal in the case of Santhi Casting Works v. CCE, Coimbatore - 2008 (11) LCX 0170.

(3.) HOWEVER , the ld. SDR submits that the fact remains that the appellant did not pay Service Tax even though they took registration, which would show that they were aware of the liability and therefore they deliberately evaded tax. Penalty under Section 78 is imposable when the Service Tax has not been paid because of suppression of facts, misdeclaration, fraud, collusion etc., with intent to evade payment of duty. In this case, the appellant was advised by M/s. Vodafone to take registration and it is quite obvious that the principal presumed that the appellant would pay the Service Tax and the appellant presumed that he was only to take registration and did not even thought of consulting any one. The appellant did not even wait for formal letter from department to pay the Service Tax with interest and as soon as omissions were pointed out, returns were filed and Service Tax with interest was paid even before formal letter and late fee for filing return was also paid in advance. In this case, the appellant started providing services in April 2007 and full payment was made in February 2008. Under these circumstances, the circular issued by the Board in 2007, wherein it was clarified that the conclusion of proceedings envisaged under sub -section (3) of Section 73 would be applicable where the Service Tax and interest are paid on ascertainment by Central Excise officers or otherwise with interest. This case is squarely covered under Section 73(3) of Finance Act, 1994 and therefore penal provision under Section 78 need not be initiated. Therefore, penalty under Section 78 is not sustainable and accordingly the same is set aside.