Per P. Karthikeyan(Oral)

This is an appeal filed by M/s. Eagle Detective Force. Under an Order dated 7.6.2006, the Assistant Commissioner found as follows:-

6. It appears that the assessee had not paid the Service Tax due for the period from 3/2002 to 3/2005 in respect of security service provided to various service receivers on the ground that he had not received the Service Tax from respective parties. This contention of the assessee is not correct as the Service Tax is liable to be paid within a stipulated period after the close of the month/quarter under Section 68[1] of Chapter V of Finance Act, 1994 and there is no specific exemption for postponement of such Tax beyond the stipulated time or till such time of realisation of Service Tax from service receivers. It appears that though the assessee had paid Service Tax to the extent of Rs. 21,442/- as per xerox copies of TR 6 challans on 17-10-2005 as confirmed from Syndicate Bank which is prior to issue of show cause notice dated 20-10-2005, the assessee has paid remaining balance of Service Tax of Rs. 2805/- on 15-5-2006. The assessee has confessed his mistake before investigating officers about non-payment of entire Service Tax in his statement dated 25-08-2005 and accordingly discharged major part of Service Tax on 17-10-2005. Hence, I take lenient view and decide the issue accordingly.

He demanded Service tax of Rs. 24,227/- along with applicable interest and imposed penalties of Rs. 2800/- and Rs. 2805/- under Sections 76 and 78 of the Finance Act, 1994 (the Act) respectively. Revising the order of the Original Authority, vide the impugned order the Commissioner imposed equal penalties as the service tax demand under Sections 76 and 78 of the Act. He found that the appellant had not put forth any reasonable grounds to take a lenient view under Section 80 of the Act. He found that the Assistant Commissioner had erred in not imposing penalty equal to the service tax demanded under both the sections 76 and 78.

2. In the appeal filed before the Tribunal, the appellant has raised the following grounds:-

The appellants were in doubt as to their service tax liability. That was a reasonable cause on their part in not collecting and paying the service tax. They had paid the tax due voluntarily before the issue of show cause notice on 20.10.2005. The Original Authority had exercised his discretion under Section 80 of the Act and had imposed penalties under Sections 76 and 78. The order of the Original authority did not suffer from any infirmity. As the assessee had paid the tax due along with interest before the issue of show cause notice, they were not liable to any penalty. They relied on the following case-laws:-

(i) CCE, Delhi Vs. Machino Montell (I) Ltd. [2004 (168) ELT 466(Tri.)]

(ii) Rashtriya Ispat Nigam Ltd. Vs. CCE [2004 (163) ELT A53(SC)]

(iii) CCE, Mangalore Vs. Shree Krishna Pipes Industries [2004 (165) ELT 508(kar.)] [LQ/KarHC/2004/81]

(iv) Jindal Vijayanagar Steels Ltd. Vs. CC, Mangalore [2004 (177) ELT 937(Tri.-Bangalore)]

On finding that there was no intention to evade tax, the original authority had correctly decided the penalty liabilities of the assessee. The appellants had particularly relied on the judgment of the Hon ble High Court of Karnataka in the case of CCE, Bangalore Vs. Sunitha Shetty [(2006 (3) STR 404(Karnataka)]. In this judgment, the Hon ble High Court had held that where the Deputy Commissioner had exercised his jurisdiction properly and found the bonafide in dropping the proceedings, the same cannot be reversed.

3. The appellant is not represented. A letter has been furnished requesting the Tribunal to decide the matter on merits. In the written submission annexed with the letter, reliance is placed on the following case laws.

(i) CCE, Belgaum Vs. Karnataka Ex-servicemen Security Agency [2010 (17) STR 9(Tri.-Bang.)

(ii) Mass Marketing and Advertising Service Ltd. Vs. CCE [2006 (3) STR 333(Tri.-Bang.)

4. The learned JDR submits that the Commissioner was competent to enhance the penalty imposed by the original authority exercising his revisionary powers. In support of this claim, he relies on the decision of the Tribunal in Dhandayuthapani Canteen Vs. CCE, Trichy [(2008 (12) STR 154(Tri.-Chennai)]. He relies on the judgment of the Kerala High Court in AC, Central Excise Vs. Krishna Poduval [(2006 (1) STR 185(Ker.)] in support of the claim that the appellant did not deserve sympathy under Section 80 of the Act. He also relies on the decision of the Tribunal in the case of M/s. Madhya Pradesh Bhootpurva Sainik Kalyan Security Service Vs. CCE, Indore (2010-TIOL-578-CESTAT-DEL) in support of the Commissioner s order enhancing penalties under Sections 76 and 78.

5. I have carefully perused the records and considered the submissions made by the learned JDR. The findings as regards the offending transactions of the appellant contained in the order of the original authority do not indicate that the assessee had wilfully evaded the payment of service tax. On its liability being pointed out, the appellant paid service tax due of 21,422/- before the issue of show cause notice. Considering the facts of the case, the Assistant Commissioner found it appropriate to impose penalty of Rs. 2800/- under Section 76 and Rs. 2805/- under Section 78 of the Act. I find that the Assistant Commissioner did not find fraud, suppression of facts, wilful mis-statement, etc. with intend to evade payment of the impugned tax on the part of the appellant. In the circumstances, it cannot be held that the penalties imposed by the Assistant Commissioner were not adequate and proportionate to the gravity of the offence committed by the appellants. In the circumstances, I hold that enhancing of penalty by the Commissioner in revisionary proceedings is not sustainable. I have also considered the various case-laws cited by both sides. In the Sunitha Shetty case (supra), the Hon ble High Court of Karnataka held that the Deputy Commissioner had correctly imposed penalty of Rs. 250/- on the respondent therein in exercise of the discretion conferred on him under Section 80 of the Act. Their lordships rejected the challenge to the order of the Tribunal rejecting the view of the Revenue that under Section 76, the minimum penalty imposable was Rs. 100/- per day. I find that the appellant has rightly relied on this judgment of the Honble High Court of Karnataka. The order of the original authority does not suffer from any infirmity in the light of this judgment.

6. In the Dhandayuthapani Canteen case cited by the learned JDR, the Tribunal partly allowed an appeal filed by the assessee challenging penalties imposed under Sections 76 and 78 of the Finance Act. That was a case where the assessee had not challenged a finding that it had wilfully evaded payment of service tax. While sustaining the penalty imposed under Section 78 of the Act, the Tribunal remanded the challenge to penalty under Section 76 for a fresh decision by the revisionary authority after taking into account the fact that the High Court had partly struck down section 76 of the Act.

7. In the Krishna Poduval case (supra), again, the Honble High Court of Kerala held in a case of evasion by suppression of facts by the respondents therein, that a person guilty of suppression deserved no sympathy under Section 80. Penalty could be validly imposed under Sections 76 and 80 if the ingredients justifying such penalty were present in the transactions.

8. In M/s. Madhya Pradesh Bhootpurva Sainik Kalyan Security Service case (supra), the Tribunal upheld the penalty imposed under Sections 76 in addition to Section 78 as the appellant therein were guilty of suppression of facts and had not challenged findings of the lower authorities to that effect. I find that the ratio of this judgment also does not apply to the facts of the instant case.

9. In the circumstances, the impugned order is set aside and the order of the Original Authority is restored. The appeal is allowed.