M/s. C.C.I. Logistics Limited vs Commissioner Of CGST And CX, Kolkata North Commissionerate (Erstwhile Service Tax-I Kolkata Commissionerate)

The present appeal has been filed by the assessee, M/s. C.C.I. Logistics Ltd. against imposition of penalty of Rs. 23,98,177/- under Section 78 of

the Finance Act, 1994 vide Order-in-Original dated 05.01.2016 passed by the Addl. Commissioner, Service Tax, Kolkata. The said penalty amount has

been further upheld by the Ld. Commissioner (Appeals), Kolkata vide Order-in- Appeal dated 12.12.2018, which has been assailed by the assessee in

the present appeal before me.

Briefly stated, the facts of the case are that the appellant is engaged in providing various taxable services for which it has obtained service tax

registration. In the course of audit undertaken by CERA audit team, a short payment of service tax was ascertained for which spot memo was issued

in January 2011 for the period 2009-2010, which was immediately deposited by the appellant alongwith applicable interest under intimation to the

Departmental authorities. Show Cause Notice dated 21.04.2014 (SCN) was issued to raise demand and appropriate the service tax already deposited

by the appellant. The SCN also proposed imposition of penalty equivalent to service tax amount. In the course of adjudication, the adjudicating

authority confirmed the demanded service tax and ordered for appropriation of the amount already deposited, with further imposition of equal penalty

u/s 78. Appeal filed by the assessee against the said adjudication order remained unsuccessful. Hence, the present appeal before the Tribunal.

Shri S.K. Goyal, learned Chartered Accountant appeared for the appellant and Shri A Roy, learned Authorized Representative appeared for the

Department.

The Learned Chartered Accountant for the appellant submitted that since the entire service tax amount was deposited alongwith interest

immediately after the short payment of tax was informed by the CERA authorities, the question of further imposition of penalty should not arise in

view of Section 73(3) of the Act. He also submitted that once the service tax amount with applicable interest is already deposited, the very SCN

should not have been issued. He also submitted that the appellant is entitled to the benefit of Section 80 of the Act for waiver of the penalty amount.

He relied upon the following judicial pronouncements :- Â

· Electro ZavodPvt. Ltd vs. CST, Kolkata (Final Order no. 77058/2019 dated 19.9.2019) Â

· M/s. Jain Udyog vs. Comm of CGST, Agartala (Final Order no.76867/2019 dated 11.12.2019)

· YCH Logistics India Pvt Ltd vs. CCE, Bangalore 2020-TIOL-605-CESTAT-BANG

The learned Authorized Representative appearing for the Revenue reiterated the findings made by the learned Commissioner(Appeals) and

submitted that the appellant assessee had willfully not paid the service tax amount and therefore, the appellant assessee is not entitled to the benefit of

Section 80 of the Act. He also submitted that the penalty amount upheld in the impugned appeal order is legally correct and accordingly prayed that

the same may be upheld by rejecting the instant appeal.

Heard both sides through video conferencing and perused the appeal records.

I find that penalty has been imposed by the authorities below with the finding that the appellant had not deposited service tax on the basis of own

ascertainment and that it was only after the CERA audit was undertaken, the short payment of tax was detected. I find that the very SCN was issued

in the year 2014 for which the compliance was already made by the appellant in 2011 by way of payment of tax and interest soon after the short

payment was detected. The only allegation in the SCN is that the appellant-assessee has not deposited service tax on their own ascertainment. I find

that when the tax amount stands already deposited with interest, the very SCN was not required to be issued under Section 73(3). Merely because the

tax amount has been deposited on the basis of ascertainment by the Department, the assessee cannot be deprived of the benefit of aforesaid

provisions, more so in view of the fact that no evidence has been adduced in the SCN that there was a deliberate short payment. Any other

interpretation will render the said provision redundant inasmuch as the very intention of the said provision is to reduce litigation when compliance is

made by the assessee.

Since the tax amount alongwith interest has already been deposited by the assessee, I do not find any reason to uphold the penalty amount in

absence of evidence of fraud or suppression with an intent to evade payment of tax. Hence, the penalty imposed is set aside. The appeal is thus

allowed in above terms with consequential benefits, if any.

(Order pronounced in the open court on 16 June 2021.)