By TIOL News Service

NEW DELHI, MAY 21, 2014: THE appellant, a Proprietary unit was providing services of site formation & Clearance, Excavation & Earthmoving & Demolition services to M/s. Northern Coalfields Ltd. and were discharging their service tax liability.

With effect from 01.04.2008 the said proprietary unit was taken over by M/s. GSCO Infrastructure Pvt. Ltd. Consequently, the old company applied to M/s. Northern Coalfield Ltd. for change in the name of agreement. As the said request was taking time at the end of M/s. Northern Coalfields Ltd., the appellant intimated their jurisdictional Central Excise Officers indicating that though they have surrendered their old service tax registration and has obtained new service tax registration in the name of M/s. GSCO Infrastructure Pvt. Ltd., they are unable to deposit the service tax liability on account of non-payment of the same by M/s. Northern Coalfield in the name of the new company.

In the above backdrop, service tax of Rs.29,08,734/- was deposited alongwith interest between October 2008 and Jan, 2009. Subsequently, SCN was issued for imposition of penalties resulting in passing of the impugned order by the CCE, Bhopal imposing penalty u/s 76 of the Finance Act.

Before the CESTAT the appellant submitted that it is not a case of any malafide so as to attract the penal provisions. Inasmuch as since they had kept the department in the loop as to the reasons for non-deposit of the tax on time and that they had subsequently deposited the service tax with interest liability, the same is sufficiently penalty in character and did not call for a separate imposition of penalty u/s 76 of the FA, 1994.

The CESTAT observed -

++ Its stands very clearly stated by the appellant in their various communications addressed to the jurisdictional Central Excise Officers that the service tax is not being deposited because of the delay occurring for name change in the agreement, the duty liability was accepted by the appellant and was actually deposited alongwith interest even before the issuance of show cause notice.

Holding that in the said scenario there is no justification for imposition of penalty, in view of the provisions of section 80 of the FA, 1944, the Bench set aside the same while confirming the duty and interest as not contested.

(See 2014-TIOL-808-CESTAT-DEL)