M/S. EURO CERAMICS LTD. Vs. CCE RAJKOT

JUDGEMENT

(1.) THIS appeal is directed against order -in -appeal No. 158/2011/COMMR(A)/RBT/RAJ, dt. 30.09.11. The brief facts are that during the course of Audit by the Officers of Central Excise, Rajkot of M/s. Euro Multivision Ltd., scrutiny of Balance Sheet & Debit Notes it was noticed that the said appellant M/s. Euro Ceramics Ltd., Bhachau (A group of company of the appellant) had collected rent for using their premises by M/s. Euro Multivision Ltd., Bhachau situated at Boston House, Ground Floor, Suren Road, Chakala, Andheri (East) Mumbai - (regd. office/Head Office of M/s. Euro Multivision Ltd., Bhachau) by issuing Debit Notes to M/s. Euro Multivision Ltd., Bhachau. Scrutiny of Debit Notes issued by the said appellant revealed that no service tax was charged on the amount of rent income, classifiable under the category of "Renting of Immovable Property" which is taxable service w.e.f. 01.06.2007. Total rent collected by the appellant is Rs. 21,85,904/ - for the period from June 2007 to March 2008 and Rs. 13,50,459/ - for the period from April 2008 to December 2008, on which no service tax has been paid by the appellant. Total amount of service tax calculated comes to Rs. 4,37,095/ -. However, the appellant has informed the department vide letter dated 17.12.09 and 22.02.2010 that service tax has been paid under protest amounting to Rs. 3,89,012 along with interest of Rs. 88,169/ -. Service tax amounting to Rs. 48,083/ - has not been paid by the appellant which resulted in short payment of service tax and said amount of service Tax is required to be demanded and recovered from the appellant. The above, observations culminated into issuance of show cause notice No. V1(a)8 -68/IA/ST/09 -10 dated 28.07.2010 proposing to consider the services rendered by them as taxable service under the category of "Renting of Immovable Property" as defined under Section 65 of the Finance Act, 1994 as amended and to recover Service Tax of Rs. 48,083/ - under Section 73(1) read with Section 68 of the finance Act, 1994, to appropriate the Service Tax amounting to Rs. 3,89,012/ - and interest amount to Rs. 88,169/ - already paid by the appellant, to recover the interest at the applicable rate on the amount of service tax liability of Rs. 48,083/ - for the non payment of such service tax, under Section 75 of the Finance Act, 1994 and also to impose penalties under Section 76, 77 & 78 of the Finance Act, 1994.

(2.) SHOW cause notice was adjudicated by the lower authorities and vide order -in -original dated 27.7.11, service tax liability was confirmed and interest thereon was demanded along with imposition of penalty under Section 76, 77 & 78 of the Finance Act, 1994 was imposed. Aggrieved by such an order, appellant preferred an appeal before the first appellate authority for setting aside the penalties imposed. The first appellate authority after considering the submissions made before the assessee, set aside the penalties imposed under Section 76 & 77 of the Finance Act, 1994 but confirmed the penalties imposed under Section 78. Hence this appeal.

(3.) LD . Additional Commissioner (A.R.) would on the other hand submit that the appellant had not paid the entire amount of the service tax liability before the issuance of show cause notice in fact he has made the part payment only. It is his submission that he is not in a position to ascertain whether the appellant is in appeal against this order for setting aside the penalties under Section 76, 77 & 78.