REAL MATHEMATIC CLASSES Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THIS appeal by the assessee is directed against the order of the Commissioner of Central Excise, Jaipur dated 26.4.2007/3.5.2007 imposing penalty at the rate of Rs. 100/ - per day from the date service tax became payable till the actual date of payment under Section 76 of the Finance Act, 1994. The order was passed in exercise of suo moto revisional power under Section 84 of the Finance Act. Section 84 of the Act lays down that the Commissioner may call for the record of proceedings in which an adjudicating authority has passed any decision or order, make such inquiry or cause such inquiry to be made and, subject to the provisions of this Chapter, pass such order thereon as he thinks fit after giving opportunity of hearing to the assessee. Section 76 of the Act provides for imposition of penalty on failure to pay service tax. For easy reference Section 76 may be quoted as hereunder -

(2.) ON a bare reading it is evident that where any person liable to pay service tax, fails to pay the same, he is liable to pay in addition to the tax and interest thereon, penalty which shall not be less than one hundred rupees per day till the date of payment. The language of the section - especially use of the word "shall" - leaves no room for doubt about the mandatory nature of the liability. Learned Counsel for the appellant at one stage attempted to challenge the adjudication Order of the Assistant Commissioner but having not appealed against the same and availed of the remedy of appeal, the appellant is clearly not entitled to challenge the correctness of the order at a later stage while challenging the correctness of the suo moto order under Section 84 the scope of which is limited to imposition of penalty.

(3.) LEARNED Counsel finally took shelter under Section 80 of the Act which lays down that "notwithstanding anything contained in the provisions of Section 76, Section 77 or Section 78, no penalty shall be imposable on the assessee for any failure referred to in the said provisions if the assessee proves that there was reasonable cause for the said failure". On a plain reading and in view of the non -obstantive clause with which the section begins, it is clear that Section 80 overrides the provisions of Section 76 among other Sections. The benefit of non -imposition of penalty, however, can be claimed by the assessee only if he is able to prove that there was a reasonable cause for failure to pay the tax and interest thereon. Question for consideration is whether in the facts and circumstances, there was a reasonable cause for failure to pay the tax. The case of the appellant is that it was providing the coaching service from the residence of the proprietor, Smt. Meenu Vijay, and it was misled into believing that the service is not covered by the definition of taxable service and as such did not pay the tax; no sooner than it came to realize the existence of the liability it paid the sum of Rs. 1,38,689/ - between 6.12.2005 and 9.3.2006.