CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad
M/s. Adani Enterprises Limited Vs Commissioner of Service Tax Ahmedabad
CORAM : Honble Mr. B.S.V. Murthy, Member (Technical)
Date of Hearing : 16.10.2009
Date of Decision : 16.10.2009
ORDER No. _____________ /WZB/AHD/2009
Per : Mr. B.S.V. Murthy,
During the verification of records by the audit party of Central Excise department, it was found that appellants had made payment of service tax belatedly on several occasions during the period from Jan 2005 to March 2007. It was also found that delay varied from 20 days to 166 days. After the same was pointed out, the appellant paid interest which is liable to be paid by them because of delays on 20.4.2007 and 14.5.2007. Thereafter, the show cause notice was issued to the appellants proposing penalty of Rs. 200/- per day in respect of delayed payment and a total penalty of Rs. 6,50,268/- was proposed to be imposed. After adjudication and appellate proceedings, penalty has been confirmed against the appellants. Hence the appeal.
2. Learned advocate Shri Hardik Modh appearing on behalf of the appellants submitted that;
(i) The delayed payment was not intentional and it happened because the appellants had purchased SAP software and it was being implemented during the relevant period. He also submits that after 2007, there was no such delay in payments.
(ii) He also submits that it was not only short payment but there were also excess payments during the period and he submits that there were at least 12 instances of such excess payment.
(iii) He also submits that since they had paid the interest voluntarily, show cause notice should not have been issued as their case is covered by Section 73, (3) of the Finance Act, 1994. He cites the decision of the Tribunal in the case of C Ahead Info Technologies India Private Limited vs. CCE (A), Bangalore 2009 (14) STR 803 (Tri.-Bang.) and Santhi Casting Works vs. CCE Coimbatore 2009 (15) STR 219 (Tri.-Chennai).
(iv) Further, he also relies on the Board Circular No. 341/18/2004-TRU (Pt.) dated 17 Dec 2004, wherein field formations were directed not to impose penalty for procedural lapses in respect of service tax on the goods transport by road committed before 31.12.2005. It was also stated that no penalty should be imposed on such defaulters unless default is on account of deliberate fraud, collusion, suppression etc.
(v) He also submits that in respect of Business Auxiliary Services, Hon’ble Mumbai High Court held that service tax was not liable to be paid by the service receiver prior to 18.4.2006 in the case of Indian National Shipowners Association vs. UOI reported in 2009 (13) STR 235 (Bom.). He submits that even though the appellants were not liable to pay service tax at all, they had paid the tax on imported Business Auxiliary Services.
3. He further submits that their case is covered by Section 73 as the problem in the software which resulted in excess payment several times and also delayed payment, the reasonable cause can be said to have been shown in respect of payments and therefore, they are entitled to waiver of penalty.
4. On the other hand, learned SDR submits that the amounts in respect of which delay in payment has taken place are very high whereas excess payments are much smaller. Further, He also submits that even after December 2005 there have been several instances of delay in payment by the appellant and therefore, Circular cited by the learned advocate would not be of any help. Further, he also submits that the fact that there is a delay from 20 days to 166 days also shows that it may not be exactly due to software problem. He also submits that appellants case is not covered by Section 73 of Finance Act, 1994, in view of the fact that in this case the show cause notice has been issued only for imposition of penalty under Section 76 and there is no mention of Section 73 at all in the show cause notice.
5. I have considered the submissions made by both sides. The Circular issued by the Board as cited by the learned advocate provides that upto December 2005 penal action may not be taken in respect of GTA services. In respect of subsequent period, the problem appears to have been because of SAP software used by the appellants. Even though it can be said that appellant should have taken care while implementing the software but fact remains that such problems do happen when new software is introduced. As rightly pointed out by the learned advocate, it was not only a case of delay in payment but there were also several instances of excess payments which itself shows that the software took time to stabilize. Another factor that goes in favour of the appellants is that they had paid service tax in respect of imported Business Auxiliary Services which the Hon’ble Mumbai High Court had clarified that it was not liable prior to 18.4.2006.
Taking all the factors into account, I consider the it a fit case for waiver of penalty under Section 80 of Finance Act, 1994 and accordingly, set aside the penalty imposed on the appellants.
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