HARYANA INDUSTRIAL SECURITY Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) THESE appeals are against a common order passed by the Commissioner (Appeals) in two separate appeals filed by the assessee against two orders of the original authority. By order, dated 19 -9 -2000, the Assistant Commissioner of Central Excise (Service Tax Unit), Faridabad had confirmed a demand of service tax of Rs. 3,18,073/ - for the period 16 -10 -98 to 31 -3 -99 under Section 68 read with Section 73 of the Finance Act, 1994. He had also ordered recovery of interest for the belated payment of service tax under Section 75 of the said Act. The Assistant Commissioner also imposed a penalty of Rs. 3,18,073/ -on the assessee under Section 78 of the Act, after holding that the latter had deliberately withheld the true value of taxable services from the Department. By a separate order, dated 5 -12 -2000, the Assistant Commissioner confirmed a demand of service tax of Rs. 3,55,500/ - against the assessee for the period 1 -4 -99 to 30 -9 -99 and also ordered recovery of interest on delayed payment of the tax. He also imposed a penalty of Rs. 3,55,500/ - on the assessee. Both the orders were issued with prior approval of the Commissioner of Central Excise as required under the proviso to Section 78 of the Act. In the appeals preferred against these orders of the Assistant Commissioner, the Commissioner (Appeals) passed a common order which is presently under challenge. By the impugned order, the lower appellate authority, inter alia, demanded an additional amount of service tax of Rs. 1,825/ - for the period April to September, 1999 and enhanced the quantum of penalty after upholding the finding of the original authority that the assessee had concealed the correct taxable value from the Department.

(2.) HEARD both the sides. The learned Consultant for the appellants submits that the enhancement of tax liability by the lower appellate authority is illegal. The demand of differential tax of Rs. 1,825/ - for the period April to September, 99 covered by the second show -cause notice, dated 18 -4 -2000 cannot be sustained as the Department has never had any objection to the decision of the original authority regarding the tax liability for the said period. Regarding the penalty, the learned Consultant submits that there was no warrant for the lower authorities to record a finding that the assessee had deliberately concealed the correct taxable value of the services from the Department. In the ST -3 return filed for the first time by the assessee, they had specifically mentioned "service charges only" for the purpose of computing service tax. In the covering letter for the return also, it was specifically mentioned that they had paid service tax on the service charges only as their petition was pending before the Hon'ble Punjab and Haryana High Court. The same was the position with the returns filed for the subsequent period. When the Department asked for gross amounts of the relevant bills for the relevant periods, such details were promptly furnished. In the circumstances, it cannot be said that the correct taxable values were deliberately suppressed from the Department with intent to evade payment of service tax, Consultant submits. It is, therefore, contended that the penalties imposed on the assessee are liable to be vacated. The learned Consultant submits that, in any case, the penalties imposed by the lower appellate authority in excess of the demands of service tax confirmed by the original authority cannot be sustained as such penalties are in excess of the limits prescribed by the Statute.

(3.) THE learned DR submits that the additional demand of service tax has been raised by the Commissioner (Appeals) on the basis of the data furnished by the assessee in their memoranda of appeals and there is no illegality in such demand. The assessee's intention to evade payment of service tax on the components other than service charges, of the gross value of services is evident from the fact that, even prior to issuance of the show cause notice, they moved the High Court challenging the relevant provisions of the Finance Act, 1994 and contending that the levy of service tax on components other than service charges was unconstitutional. The assessee was very much aware of the facts and could not have pleaded ignorance thereof. They could have disclosed the gross values collected by them. Hence the finding recorded by the original and first appellate authorities that the assessee had concealed the correct assessable value of services from the Department cannot be faulted. The learned DR also defends the quantum of penalty imposed on the assessee in this case.