GURWINDER KAUR Vs. COMMISSIONER OF C. EX., AHMEDABAD

JUDGEMENT

(1.) APPELLANT was engaged by M/s. Forever Living Products (India) Pvt. Ltd., Mumbai as their distributor -cum -commission agent. The company was manufacturing and distributing of Aloe Vera and products of the hive. The appellant was required to market the products, book the orders from customers based on which company would dispatch the products to the customers. For these services appellants were paid commission from time to time. Proceedings were initiated after enquiry and investigation against the appellant and service tax demand amounting to Rs. 4,08,970/ - for the period from 1 -5 -2006 to 31 -3 -2009 was confirmed. Penalties under Sections 76, 77 & 78 of Finance Act, 1994 were also imposed.

(2.) THE learned Chartered Accountant on behalf of the appellant submitted that the appellant has not contested the duty demand at any stage. He also submits that service tax and interest was paid before issuance of show cause notice. Further the original adjudicating authority had imposed 25% of the service tax as penalty under Section 78 of Finance Act, 1994 and this was also paid within thirty days from the date of receipt of Order -in -Original. The learned Commissioner (Appeals) in the impugned order has enhanced the penalty under Section 78 equal to the service tax demanded and has also confirmed penalties under Section 76 and 77 of Finance Act, 1994. He submits that penalties under Section 76, 77 and 78 need not have been imposed in this case. Since appellant is a lady and not very knowledgeable about business, had depended upon the instructions and guidelines provided by the company from time to time and did not have a professional set up for rendering the business and maintaining of accounts etc. Consequently she was not aware of the service tax liability at all. As soon as the investigation was started and she was informed of the law, she promptly paid the service tax with interest and when penalty was imposed under Section 78 to the extent of 25% she paid that also. He also submits that this is a fit case for waiver of penalty under Section 80 of Finance Act, 1994 and relies on the decision of the Tribunal in the case of A.S. Patel v. C.C.E., Ahmedabad reported in - 2009 -TIOL -259 -CESTAT -AHM = 2009 (15) S.T.R. 36 (Tri. - Ahmd.) to support the contention that assessee was a lady and did not have an organization to support her. As an alternative submission he also submits that penalty under Section 76 could not have been imposed in this case since show cause notice was issued on 1 -5 -2009 whereas the 5th proviso to Section 78 of Finance Act, 1994 was introduced in May 2008 and show cause notice was issued subsequently. He relies on the decision in the case of M/s. Aneja Property Dealer v. C.C.E., Ludhiana reported in - 2008 -TIOL -2586 -CESTAT - DEL = 2009 (13) S.T.R. 266 (Tri. - Del.) to support his submission that if proceedings were initiated after the amendment, the law as it existed at the time of offence would be applicable and therefore the show cause notice issued in May 2009 could not have invoked proposal for penalty under Section 76 of Finance Act, 1994.

(3.) THE learned DR would submit that ignorance of law cannot be a ground for waiver of penalty. For this purpose he relies upon the decision of the Tribunal in the case of Quality Welding Works v. C.C.E., Ludhiana reported in 2011 (21) S.T.R. 187 (Tri. - Del.). Further, he also relies upon the decision of the Honble High Court of Kerala in the case of Assistant Commissioner of Central Excise v. Krishna Poduval reported in - 2006 (1) S.T.R. 185 (Ker.) to support his contention that penalty can be imposed under Section 76 and 78 of Finance Act, 1994. Further, he also submits that the decision in the case of Aneja Property Dealer cannot be applied to the present case since the issue was entirely different and what was being dealt with was relating to reduction of penalty to 25%. He submits that in view of the provisions of Section 38A of Central Excise Act, 1944 made applicable to service tax matters, the amendment of Section 78 w.e.f. 10 -5 -2008 restricting imposition of penalty under Section 78 only when an offence can be penalized under Section 76 and Section 78 of Finance Act, 1994 cannot be given retrospective effect.