ST - Appellant was well aware of liability having taken ST registration in Feb 2003 - not complying with requirement of filing ST3 returns for long period of 6 years exhibits callous attitude - No 'reasonable cause' shown to deserve benefit of S. 80: CESTAT
By TIOL News Service
MUMBAI, JUNE 17, 2015: THE appellant took Service Tax Registration in February 2003 for service tax category "Event Management" which came into effect on August 2002.
Investigations by the department revealed that the appellant did not pay their service tax liability. They did not submit any documents such as contracts and invoices relating to the service provided to their clients. They only submitted a bank statement of M/s. UTI Bank which indicated that they had received gross value of Rs.10,51,77,288/- during the said period. It was also noticed that apart from not paying service tax since 2002, they never filed any ST3 returns.
SCN dated 7/4/2008 was issued to appellant which culminated in the O-in-O confirming demand of service tax of Rs.70,27,299/- for the period from October 2002 to March 2007 &ordering interest and imposing penalties under Section 76, 77, 78 of the Finance Act, 1994.
Before the CESTAT the appellant submitted that they are not disputing the leviablity of service tax but are aggrieved with the computation inasmuch as service tax was demanded on total gross value received by them but which should be taken as cum duty value because they neither collected nor received any amount over and above the amount shown in the Bank Statement. Reliance is placed inter alia on the decision in Motor World - 2012-TIOL-418-HC-KAR-ST.
The AR briefed the Bench about the non-cooperative attitude of the appellant right from the beginning in not receiving show cause notice, not replying to the show cause notice and not appearing for personal hearing on various grounds such as ill health. It is also emphasized that the appellant did not produce any documents throughout the investigation and upto the time of adjudication. And, therefore, the tax has been correctly demanded and confirmed, the AR submitted. On the aspect of penalty and time bar, reliance is placed on the decision in BCCI - 2014-TIOL-1774-CESTAT-MUM which was upheld by the Supreme Court - 2015-TIOL-04-SC-ST.
The Bench observed that the contention of the appellant that the gross value received should be considered as cum-tax value was not acceptable as the appellant at no stage made available any documents such as invoices and contracts with their clients which would indicate that value received by them is cum duty value; that one of the clients is a well-known company i.e. Hindustan Unilever; that there was no reason why any documents could not have been obtained from their client to show that the value received by them is actually cum duty value and that the Appellant had got enough opportunity to produce documents from their client even if their own documents were washed away in floods.
On the issue of extended time period and penalty, the CESTAT observed -
"…we note that appellant was very well aware of their responsibility and liability, having taken service tax registration in Feb 2003. But appellant still chose to avoid all Legal obligations cast on them after taken service tax registration and not complying with the requirement of filing ST3 returns on periodical basis for a long period of six years till the time of issuance of show cause notice. In the appeal memorandum, it is submitted that Commissioner ought to have granted another date of hearing after the last date of hearing 16/12/2008 whereas impugned order is passed on 4/3/2009. We cannot accept this contention in the light of appellant's callous attitude from the beginning since they took registration. Considering that appellant had service tax registration but did not receive the show cause notice, did not submit any reply to the show cause notice, did not even appear for personal hearings on various dates can only lead to the conclusion that their intentions were not bonafide. Considering the CESTAT judgment in the case of Board of Control for Cricket in India (supra) as affirmed by the Hon'ble Apex Court, we do not find it a fit case for waving penalty. It is certainly not a case for waiver of penalties under Section 80 of the Finance Act. Penalty may not be imposed in terms of Section 80 if the assessee proves that there was reasonable cause for failure to pay service tad and file returns. No "reasonable cause" whatsoever has been shown to us to deserve the benefit of Section 80."
The appeal was rejected.
(See 2015-TIOL-1159-CESTAT-MUM)
