RIKIN INDUSTRIES Vs. COMMISSIONER OF SERVICE TAX, AHMEDABAD

JUDGEMENT

(1.) BY the adjudication order dated 13 -12 -2011, the Joint Commissioner, Central Excise, Ahmedabad -II confirmed appellant's liability to service tax, as the recipient of the taxable service - Business Auxiliary Service, defined in Section 65(19), read with Section 65(105)(zzb) of the Finance Act, 1994; and appropriated Rs. 9,74,252/ - towards service tax and Rs. 1,72,359/ - towards interest, from the amount remitted by the appellant before issuance of show cause notice dated 14 -6 -2011. The adjudicating authority did not impose penalties, by relying on provisions of Section 73(3) of the Act. The Adjudicating authority discussed that while Section 66A of the Act clearly imposes liability on the service recipient to remit tax, it is likely for many assessees to assume that as recipients they are not liable to pay tax; that in the instant case the failure to remit tax was occasioned by a bona fide misconception; and therefore, no case is made out for levy of penalty -

(2.) REVENUE preferred an appeal against the adjudication order. With regard to non -levy of penalty by the adjudicating authority, the appellate Commissioner by the order dated 14 -5 -2012 (impugned herein), reversed the conclusion of the adjudicating authority. Commissioner (Appeals) concluded that the adjudicating authority had erroneously invoked provisions of Section 73(3) of the Act and that, where there was willful contravention of the provisions of Chapter 5 of the Act, with a view to evade payment of service tax, provisions of sub -section 3 would not apply, in view of the provisions of sub -section 4 of Section 73.

(3.) THE learned counsel for the appellant strenuously contends that since provisions of Section 66A were in challenge before various Courts, the appellant assessee was under a bona fide impression that compliance with the said provisions is not mandatory. This contention is stated to be rejected. It is axiomatic Legislation is operative proprio vigore on its enactment and effectuation. The operation of legislation is not contingent upon affirmation by the judicial branch, even where a challenge to its constitutionality is presented before the Courts. No person therefore, could reasonably harbour any manner of doubt that when legislation is under challenge, the challenged legislation is in eclipse to be upheld. A delusional assumption cannot be elevated to the status of a bona fide doubt. The appellate authority has rightly rejected the appellant's claim in this regard and has rightly reversed the order of adjudicating authority on a true and fair construction of Section 73(4) of the Act. The order of the Appellate Commissioner is impeccable and warrants no interference. The appeal is without merits and is therefore rejected.