Central Excise Appeal No. 273 of 2014. Case: C.C.E. and S.T., Kolhapur Commissionerate Vs Honai Constructions. High Court of Bombay (India)
| Case Number | Central Excise Appeal No. 273 of 2014 |
| Counsel | For Appellant: Shri Pradeep S. Jetly with J.B. Mishra, Advocates and For Respondents: Ms. Padmavati Patil i/by Aparna Hirandagi, Advocates |
| Judges | S.C. Dharmadhikari and G.S. Patel, JJ. |
| Issue | Finance Act, 1994 - Section 78 |
| Citation | 2016 (42) STR 244 (Bom) |
| Judgement Date | February 01, 2016 |
| Court | High Court of Bombay (India) |
Order:
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This appeal challenges an order dated 3 January, 2014 passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Mumbai (''Tribunal'') reversing the order passed by Commissioner (AppealsII) dated 20 September, 2010. By its order passed on 3 January, 2015, the Tribunal allowed the assessee''s appeal and set aside the penalty imposed under Section 78 of the Finance Act, 1994.
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The appeal before the Tribunal was directed only against that part of the order of Commissioner (Appeals) where he sustained the penalty under Section 78 of the Finance Act, 1994 and upheld the imposition thereof.
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The argument of the assessee was that it was constructing the factory for a co-operative spinning mill by virtue of an agreement of 19 October, 2001. The assessee is in the business of civil construction. It undertakes construction activity for both, the private sector and for State. At the time when this agreement was executed, there was no obligation in law to pay service tax on the activity undertaken pursuant to the above agreement. However, during the subsistence and implementation of the contract, service tax was imposed on commercial construction with effect from 10 September, 2004. The Revenue claimed that had they not inspected the premises of the assessee in 2007, they would not have discovered the evasion of service tax. Once the service tax was leviable during the course of implementation of the contract, then, the obligation to pay the same was absolute. There is no question of then contending that there was a bona fide impression of the assessee about the levy not being attracted or any doubt, whether the contract attracted the service tax liability or not. That is how the show cause notice was issued; but an amount of Rs. 20 lakh was paid before the order-inoriginal came to be passed and after the issuance of show cause notice. The adjudicating authority, however, found that penalty under Sections 76 and 78 of the Finance Act, 1994 was leviable for failure to pay service tax. Therefore, the adjudicating authority imposed the penalties.
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Aggrieved assessee went before the Commissioner (Appeals), who, by his order dated 20 September, 2010, found that the first payment of service tax made in July, 2007 should have alerted the assessee to make the further payments; but had the inspection not been carried out by the Revenue, the further payments would not have been forthcoming. It is in these circumstances, he...
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