At, Customs Excise Service Tax Appellate Tribunal West Zonal Bench At Mumbai
By, THE HONORABLE JUSTICE: RAMESH NAIR
By, MEMBER AND THE HONORABLE JUSTICE: RAJU
For Petitioner: V.B. Gaikwad, Advocate And For Respondents: A.B. Kulgod, Asstt. Commr. (AR)
1. The fact of the case is that the appellant is operating "Tomato RM" Radio Channel. They during the period October 2007 to March 2009 did not pay the service tax on the service of Broadcasting, accordingly the show cause notice was issued and the same was culminated into adjudication order. The appellant paid the entire service tax along with interest and 25% penalty however they challenged the order-in-original before the Ld. Commissioner (Appeals) for
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seeking relief from penalty imposed for the equal amount under Section 78 and also penalty imposed under Section 76 of the Finance Act, 1994. The Ld. Commissioner (Appeals) vide impugned order upheld the order-in-original however dropped the penalty imposed under Section 76 of the Finance Act, 1994, therefore the penalty appeal waiver of penalty upheld under Section 78 of the Finance Act. Shri V.B. Gaikwad, Ld. Advocate appearing on behalf of the appellant submits that against the total demand of Rs. 27,13,790/-. The appellant had cenvat credit to the tune of Rs. 19 lakhs approximately, therefore there was no mala fide intention to evade payment of service tax. In this circumstances penalty under Section 78 of the Finance act, should not have been imposed in terms of Section 80 of the Finance Act, 1994. In this regard, he placed reliance on the following decisions:
(i) Vikash J. Shah Vs. Commissioner (Appeals), Coimbatore 2016 (334) 491 (Mad.).
(ii) Oil & Natural Gas Corporation Ltd. Vs. Commr. Of C. Ex. & S.T., Surat : 2015 (38) STR 867 (Tri. - Ahmd.)
(iii) AD Vision Vs. Commissioner of Service Tax, Ahmedabad : 2011 (21) STR 455 (Tri.-Ahmd.)
(iv) Amrut Bhagini Mandal (Trading Unit) Vs. CCE Pune-II Final Order No. A/116/15/EB, dt. 18.12.2014
(v) Sumitra Television Network Vs. Commissioner of Central Excise, Kolhapur Final Order No. A/141/12/CSTB/C-I dt. 15.02.2012
(vi) Deputy Commr. Of C. Ex., Thrissur-I Vs. Apollo Tyres Ltd : 2012 (281) E.L.T. 370 (Ker.)
(vii) Uniworth Textiles Ltd. Vs. Commissioner of Central Excise, Raipur : 2013 (288) E.L.T. 161 (S.C.).
2. Shri A.B. Kulgod, Ld. Assistant Commissioner (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that the appellant had collected service tax from the service recipient as per the statement given by Shri Deepak Khot, Finance Manager accordingly the appellant was well aware about the liability of the service tax. Therefore there is no bona fide proof for non-payment of service tax, accordingly penalty under Section 78 of the Finance Act was rightly imposed by the lower authority which does not require any interference. We have carefully considered the submissions made by both the sides, we find that the limited issue of penalty under Section 78 of the Finance Act is to be decided in this appeal. The main submission of the Ld. Counsel is that since cenvat credit to the tune of Rs. 19 lakhs was available with the appellant at least to that extent, there was revenue neutral situation, hence penalty under Section 78 of the Finance Act, corresponding to the service tax of Rs. 19 lakhs should not have been imposed. We do agree with the Ld. Counsel following the ratio of Hon'ble Madras High Court judgment in the case of Vikash J. Shah Vs. Commissioner (Appeals), Coimbatore : 2016 (334) E.L.T. 491 (Mad.), wherein the Hon'ble High Court has held that there cannot be any liability to pay service tax when the tax is already available in the form of Cenvat. This Tribunal has taken view that when the cenvat credit is available, the non-payment of service tax/ duty only creates revenue neutral situation. In this case admittedly there was cenvat of Rs. 19 lakhs available with the appellant therefore to that extent appellant was not required to pay service tax in cash and it was only adjustable against the said cenvat credit. Therefore the penalty of Rs. 19 lakhs i.e. equal to the Cenvat Credit under Section 78 of the Finance Act, is not sustainable. We therefore set aside the penalty of Rs. 19 lakhs out of the total penalty of Rs. 27,13,790/-Needless to say that if the amount of 25% of the remaining penalty along with service tax and interest has been paid by the appellant within 30 days from the date of communication of the order-in-original, the benefit of second proviso to Section 78 is available to the appellant, accordingly penalty shall stand reduced to 25% of penalty of Rs. 18,13,790/-. The demand of service tax, interest and payment thereof made by the appellant is maintained. The appeal is partly allowed in the above terms