INMA INTERNATIONAL SECURITY Vs. C.C.E.

JUDGEMENT

(1.) THE appellants were engaged in the activity of providing "Security Agency Service" to the needy during the period of dispute, after getting registered for such purpose with the Department. They committed default of payment of service tax for the period Oct. '01 to Mar. '03, for which the payments were made in the months of June and July, 2003. The delay of these payments varied from 75 to 556 days. There was also delay in the filing of service tax returns for three months. Citing these defaults, the Department issued a show cause notice to the party seeking to recover interest on the amounts of tax belatedly paid as also to impose penalties. In their reply, the assessee pleaded for exoneration from penal liability on the ground that they had paid the entire amount of service tax prior to issuance of the show cause notice. They also pleaded financial crisis as the reason for delay of payment of tax. The original authority worked out the interest payable on the tax amounts at the rate of 24% per annum for the period up to 15 -8 -2002 and at the rate of 15% per annum for the period from 16 -8 -2002 till the date of payment of tax under Section 75 of the Finance Act, 1994. The total amount of interest thus worked out to Rs. 22,009/ -. The authority also imposed penalty equal to tax on the assessee under Section 76 of the Act. It imposed a separate penalty of Rs. 3,000/ - on them under Section 77. The decision of the original authority was upheld by the first appellate authority. Hence this appeal.

(2.) LD . Consultant for the appellants submits that, under the Central Excise law, any penalty was not imposable where the amount of duty in dispute was paid prior to issuance of show cause notice. According to him, this principle is applicable to the penal provisions of Section 76 of the Finance Act, 1994 as well. It is further argued that the assessee was entertaining a genuine doubt regarding their liability to pay service tax and, therefore, they happened to pay the tax belatedly. In the circumstances, it is argued, they are eligible for the benefit of Section 80 of the Finance Act. Yet another submission made by the Id. Consultant is that the interest quantified by the lower authorities is not correct. According to his estimate, the interest leviable is only Rs. 18,786/ -, for the extent of delay which could be worked out on the basis of Annexure -A to the order passed by the original authority. With reference to Section 80 of the Finance Act, Id. Consultant has cited the Tribunal's Larger Bench decision in ETA Engineering ltd. v. Commissioner of Central Excise, Chennai , wherein the assessee was found to have had a bona fide doubt whether the activity was taxable under the Finance Act, 1994 or not and it was held that such doubt was a reasonable cause for not paying service tax in time.

(3.) LD . SDR reiterates the findings of the original authority and the first appellate authority and further submits that the only reason stated by the assessee in the present case for the delay of payment of tax is financial crisis, which is not a 'reasonable cause' within the meaning of this expression under Section 80 of the Finance Act, 1994. It is further contended that the penal provisions of the statute are specific and do not attract any principle governing imposition of penalty under the Central Excise Act. As regards the quantum of interest, it is suggested that the matter could be remanded to the original authority for re -quantification after verification of the fact pleaded by the assessee.