COMMISSIONER OF CENTRAL EXCISE Vs. AVS ASSOCIATES

JUDGEMENT

(1.) THE relevant facts of the case as per record, in brief, are that M/s. AVS Associate (hereinafter referred to the "assessee") in a partnership firm managed by Shri Alok Khanna, Partner. The assessee provided service to M/s. Vindhyachal Distilleries Pvt. Ltd. (hereinafter referred to as the "Company") under the category of "Rent -a -Cab services" and "Business Auxiliary services". Shri Alok Khanna is also Director of M/s. Vindhyachal Distilleries Pvt. Ltd. Superintendent of Central Excise, Range -Sehore while scrutinizing the record of the Company noticed that the assessee had not paid tax in respect of Rent -a -Cab services and Business Auxiliary Services. In the month of January, 2007, the Superintendent of Central Excise directed the assessee to deposit the tax along with interest. The assessee on 24 -1 -2007 paid service tax of Rs. 1,90,902 and Rs. 2,56,833 for the period from 1 -4 -2000 to November, 2006 in respect of Rent -a -Cab services and for the period from 1 -4 -2004 to 31 -3 -2006 in respect of Business Auxiliary Services. They also paid the interest of Rs. 1,38,140 on 31 -5 -2006. A show -cause -notice dated 24 -9 -2007 was issued proposing to impose penalty under Sections 76, 77 and 78 of Finance Act, 1994. The Original Authority imposed penalty of equal amount of tax of Rs. 4,44,735 under Section 76, Rs. 1,000 under Section 77 and equal amount of tax of Rs. 4,44,735 under Section 78 of the Act. Commissioner (Appeals) set aside the penalties under Section 76 of the Act and upheld penalty under Sections 77 and 78 of the Act. Hence, the assessee filed appeal against imposition of penalty under Sections 77 and 78. Revenue filed appeal against setting aside of penalties under Section 76 of the Act.

(2.) THE ld. Chartered Accountant on behalf of the assessee submits that the assessee entered into a lease agreement with M/s. Vindhyachal Distilleries Pvt. Ltd. in respect of Rent -a -Cab services. He submits that they were under impression that the Rent -a -Cab services would not be covered on lease agreement. He also submits that business auxiliary service in respect of commission was exempted prior to 1 -4 -2004. The assessee had no knowledge of the withdrawal of the exemption Notification. He further submits that the assessee duly recorded the entire transaction in their statutory accounts and therefore there is no intention to evade payment of tax. He submits that no show -cause notice should be issued under Section 73(3) of Finance Act, 1994 as they deposited tax before show -cause notice. He relied upon various decision of the Tribunal. It is contented that they have not collected the tax from the M/s. Vindhyachal Distilleries Pvt. Ltd. It is also submitted that Shri Alok Khanna merely signed the challan of M/s. Vindhyachal Distilleries Pvt. Ltd. which cannot be treated that he had knowledge of the levy of the tax. It is a case of non -payment of tax due to bona fide belief and therefore Section 80 of the Act is liable to be invoked.

(3.) AFTER hearing both the sides and on perusal of records, I find that M/s. Vindhyachal Distilleries Pvt. Ltd. registered with Service Tax Authorities in respect of payment of GTA Services. It is seen that Shri Alok Khanna, Director of the said Company had signed the service tax documents, namely, TR -6 Challans. It is noted that about 7 years elapsed; no enquiry was made by Shri Alok Khanna in respect of levy of the tax of the assessee. The ld. Counsel drew the attention of the Bench on various case laws wherein penalty was set aside on the Rent -a -Cab services as under a bona fide belief as well as no tax was recovered by the assessee. But, in the present case, the partner of the assessee is also Director of the other Company, which was registered with the Service Tax Authority. Thus, the case laws as relied upon by the ld. Counsel are not applicable to the present case. Taking into account the overall facts and circumstances of this particular case, I find that there is a contravention of the provisions of the Act with intent to evade payment of tax, so, the Commissioner (Appeals) rightly upheld the penalty under Sections 77 and 78 of the Act. The appeal filed by the assessee has no merit.