K.R. Venkatachalam vs Customs, Excise and Service Tax Appellate Tribunal and Others

R. Sudhakar, J.—This Civil Miscellaneous Appeal is filed by the assessee challenging the Miscellaneous Order No. 41709 of 2014, dated 10.10.2014 passed by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench at Chennai, raising the following questions of law:

"1. Whether it is proper and legal for a single Member of the Customs, Excise and Service Tax Appellate Tribunal to overlook the principle laid down by the Apex Court with regard to the non-maintainability of a second show cause notice alleging suppression on the same subject matter?

Whether it is proper and legal for the single Member of the Customs, Excise and Service Tax Appellate Tribunal to overlook the final finding of the Division Bench of the same Tribunal on the same set of facts involving the same appellant to the effect that there is no substance to invoke the extended period for demanding service tax and insist for pre deposit?"

The appellant/assessee is providing rent-a-cab operator services to M/s.BSNL, Erode from April 2005 to December, 2005. A show cause notice was issued on 21.4.2008 to the assessee demanding service tax for contravening the provisions of Section 68 of the Finance Act, 1994 read with Rule 6(1) of Service Tax Rules, 1994, since the assessee had not paid appropriate service tax for the services rendered and also contravened the provisions of Section 70 of the Finance Act, 1994 read with Rule 7 of the Service Tax Rules, 1994 by not filing the prescribed returns.

In response to the show cause notice, the appellant filed a written reply inter-alia contending that they had not collected any service tax from M/s.BSNL, Erode for the services provided to them and they had not suppressed any relevant facts.

Not satisfied with the reply, the Adjudicating Authority passed an order demanding service tax, the relevant portion of which, reads as follows:

ORDER

"1. I invoke the extended proviso to Section 73 of Finance Act, 1994 to demand the Service Tax for the period from April 2005 to December 2005.

I demand an amount of Rs.80,536/- (Service Tax - Rs.78,955/- + Education Cess - Rs.1,581/-) (Rupees Eighty thousand five hundred and thirty six only) under Section 73(1) of Finance Act, 1994.

I demand interest at the appropriate rate under Section 75 ibid on the above service tax amount.

I impose a penalty of Rs.200/- for every day during which such failure continued or at the rate of 2% of such Tax per month (whichever is higher) starting with the first day after the due date till the date of actual payment of the outstanding amount of Service Tax on the assessee under Section 76 of the Finance Act, 1994.

I impose penalty of Rs.1,000/- (Rs.One thousand only) under Section 77 ibid for the failure to furnish the prescribed returns.

I impose penalty of Rs.80,536/- Rupees Eighty thousand five hundred and thirty six only) under Section 78 of Chapter V of Finance Act, 1994.

However as per the first proviso to Section 78 ibid, the assessee may pay only twenty five percent of the penalty imposed under this Section, if the Service tax as determined in this order along with appropriate interest is paid within 30 days from the date of receipt of this order. Further as per second proviso to Section 78 ibid, the benefit of reduced penalty under the first proviso to Section 78 ibid shall be available only if the amount of penalty as determined has also been paid within a period of thirty days referred to above."

Aggrieved by the order of the Adjudicating Authority, the assessee preferred an appeal before the Commissioner (Appeals), who, by order dated 24.09.2013, confirmed the order of the Adjudicating Authority.

As against the said order, the assessee filed an appeal before the Tribunal along with a petition for waiver of pre-deposit. The Tribunal, by order dated 10.10.2014 declined to grant absolute stay of pre-deposit holding as follows:

"5. After considering the submissions of both sides and on perusal of the records, I find that there is no dispute that the applicants have rendered rent-a-cab service to M/s.BSNL during the material period. They have received the consideration but have not deposited service tax with the Government. As seen from the show-cause notice dated 21.4.2008, it has been clearly brought out that the applicants have not filed any ST-3 returns for the half-yearly period ending 30.9.2005, 31.3.2006 and 30.9.2006. The applicants have received an amount of Rs.19,73,888/- towards rent-a-cab service from their service recipient M/s.BSNL during the period of dispute. Prima facie, I am not satisfied with the plea of the applicant that the demand is barred by limitation for the reason that in spite of issue of first show cause notice, the applicant has failed to pay the service tax and have not filed ST-3 returns. The decisions of the Hon''ble Supreme Court relied by both sides are for and against on the point of limitation and these will be examined at the time of hearing the appeal at length. Since the applicant is not contesting the issue on merit and their claim is restricted to limitation, prima facie, they have not made out a strong case for waiver of pre deposit of entire dues. Accordingly, I direct the applicant to pre deposit Rs.40,000/- (Rupees forty thousand only) within a period of eight weeks and report compliance on 19.1.2014. Upon such deposit, pre deposit of the balance dues stands waived and recovery thereof stayed during the pendency of the appeal."

Aggrieved by this order of Tribunal, the present appeal has been filed raising the abovementioned substantial questions of law.

Learned counsel appearing for the assessee/appellant submits that on the very same issue, for the earlier period, which was subject matter of show cause notice dated 17.4.2006, an order was passed by the Adjudicating Authority demanding service tax, which was confirmed by the Commissioner (Appeals). On appeal, the Tribunal set aside the tax and penalty.

Heard learned counsel appearing for the appellant and learned standing counsel appearing for the second and third respondents and perused the materials placed before this Court.

On a prima facie case taken by the appellant that for the previous year where the proceedings initiated by the Department was set aside by the Tribunal and that being the case for the subsequent period, the said benefit should enure to the appellant insofar as the pre-deposit is concerned. As against the earlier order of the Tribunal for the previous year, an appeal has been filed by the Department, in respect of another issue, in C.M.A. No.2065 of 2010, which is stated to be pending before this Court.

In the light of the above, pending the above proceedings, the appellant is entitled to waiver of entire pre-deposit. Accordingly, the order of the Tribunal stands set aside and this Civil Miscellaneous Appeal stands allowed. No costs. Consequently, M.P. No.1 of 2014 is closed.