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2018 Supreme(Raj) 1881
IN THE HIGH COURT OF RAJASTHAN AT JAIPUR BENCH
K.S. Jhaveri and Vijay Kumar Vyas, JJ.
Commissioner Of C. Ex., Jaipur-i - Appellant
Versus
Rajasthan Renewable Energy Corpn. Ltd. - Respondent
Central Excise Appeal No. 36 of 2017
Decided On : 07-03-2018
Shri Sandeep Pathak, Advocate, for the Appellant; Sameer Jain with Dakh Pareek and Arjun Singh, Advocates, for the Respondent
The ingredients of Section 80 of the Finance Act, 1994, which provides for waiver of penalty, are different from the ingredients required for invoking the extended period of limitation under Section 73(1) of the Act.
Headnote:
SERVICE TAX - WAIVER OF PENALTY - SECTION 80 OF FINANCE ACT, 1994 - EXTENDED PERIOD OF LIMITATION - SECTION 73(1) OF FINANCE ACT, 1994 - INGREDIENTS - INTERPRETATION - BONA FIDE BELIEF - PUBLIC SECTOR UNDERTAKING - Held that where relief from penalties is granted by giving the benefit under Section 80 of the Act of 1994 (on the basis of bona fide belief on the part of the assessee, the extended period of limitation cannot be invoked for confirmation of service tax demand on the basis of the allegations of wilful misstatement, suppression of facts or deliberate contravention of Rules with an intention to evade the duty payment.
Fact of the Case:
The appellant, a public sector undertaking, challenged the Tribunal's order upholding the imposition of penalty under Section 76, 77 and 78 of the Finance Act, 1994, while waiving the service tax demand beyond the normal limitation period under Section 80 of the Act. The appellant contended that the ingredients required for invoking the extended period of limitation under Section 73(1) of the Act were not present in the case and that the Tribunal erred in holding that the ingredients of Section 80 of the Act were the same as those required for invoking the extended period of limitation.
Finding of the Court:
The Court held that the Tribunal erred in holding that the ingredients of Section 80 of the Act were the same as those required for invoking the extended period of limitation under Section 73(1) of the Act. The Court observed that the decision relied upon by the Tribunal was never challenged by the department and that, in view of the consistent practice, the decision should be accepted for every assessee.
Issues: 1. Whether the Tribunal was correct in holding that where relief from penalties is granted by giving the benefit under Section 80 of the Act of 1994 (on the basis of bona fide belief on the part of the assessee, the extended period of limitation cannot be invoked for confirmation of service tax demand on the basis of the allegations of wilful misstatement, suppression of facts or deliberate contravention of Rules with an intention to evade the duty payment? 2. Whether the Tribunal was correct in holding that the ingredients of Section 80 of the Act of 1994 are same as that of the ingredients which are required for invoking extended period of limitation provided in the proviso to Section 73(1) of the Act of 1994?
Ratio Decidendi: The Court held that the Tribunal erred in holding that the ingredients of Section 80 of the Act were the same as those required for invoking the extended period of limitation under Section 73(1) of the Act. The Court observed that the decision relied upon by the Tribunal was never challenged by the department and that, in view of the consistent practice, the decision should be accepted for every assessee.
Final Decision: The Court answered the issues in favor of the assessee and against the department, and dismissed the appeal.
JUDGMENT
K.S. Jhaveri, J. - By way of this appeal, the appellant has challenged the judgment and order of the Tribunal [2017 (51) S.T.R. 269 (Tribunal)] whereby Tribunal has disposed of the appeal by observing as under :
3. After hearing the Ld. Departmental Representative, we find that admittedly Section 80 of the Act is invoked by the adjudicating authority and penal proposal stands dropped by observing as under :-
"23. The noticees have argued that they were under bona fide belief that they were not liable to service tax therefore it's a fit case waiver of penalty in terms of section 80 of the Act. The issue of suppression of fact and invocability of section proviso to section 73 has already been discussed in preceding para and it has been held that the proviso is rightly invocable. However considering the fact that the noticees are a State Government undertaking and the benefit of evasion of service tax would not go to any private person of company and also that they have already deposited Rs. 68 lakh voluntarily, I am inclined to accept the plea of the noticees that there was reasonable cause for failure to pay tax. It has been held in several cases that even if the proviso to section 73 for extending the period of demand on account of suppression of fact, etc., is invoked the waiver under section 80 can still be given. I therefore extend the benefit of section 80 of the Finance Act, 1994 and waive penalty under Section 76, 77 and 78 of the Act."
4. Tribunal in its number of cases observed that where the penalty under Section 80 of the Act has not been imposed by extending the bona fide belief on the part of the appellant, the extended period would not be invocable inasmuch as the same ingredients are required for invocation of extended period of limitation. Such references can be made in the case of Sankhla Udyog vs. CCE, ST, Jaipur [2015 (38) S.T.R. 62 (Tri.-Del.)] as also to the decision in the case of BSNL vs. CCE, Ahmedabad [2009 (14) S.T.R. 359 (Tri.-Ahmd.)]
5. We also further note that the appellant is a public sector under taking, being a State Govt. enterprise, in such a case allegation of wilful misstatement, suppression of facts or deliberate contravention of Rule with an intention to evade the duty payment cannot be made. Tribunal has observed the same in the case of CCE, Allahabad vs. Bharat Yantra Nigam Ltd. [2014 (36) S.T.R. 554 (Tri.-Del.)] "
2. This Court while admitting the appeal on 9-8-2017 [2017 (7) G.S.T.L. J176 (Raj.)] framed following substantial questions of law :
"Whether the Learned CESTAT is correct in holding that where relief from penalties is granted by giving the benefit under Section 80 of the Act of 1994 (on the basis of bona fide belief on the part of the assessee, the extended period of limitation cannot be invoked for confirmation of service tax demand on the basis of the allegations of wilful misstatement, suppression of facts or deliberate contravention of Rules with an intention to evade the duty payment?
"Whether the Learned CESTAT was correct in holding that the ingredients of Section 80 of the Act of 1994 are same as that of the Act of 1994 are same as that of the ingredients which are required for invoking extended period of limitation provided in the proviso to Section 73(1) of the Act of 1994?"
3. Counsel for appellant has taken us to the original order which has been passed by the authority and contended that taking into consideration the conduct of the respondent which is narrated as under :
5. On being asked, M/s. RRECL provided the requisite information vide their letter dated 10-12-2008, 1-9-2009, 22-9-2009 and 4-12-2009 and also submitted a chart as the breakup of various fees received from July, 2005 to November, 2008 wherein they havd shown taxable value and Service Tax outstanding amount as Rs. 1,34,95,873/- against them, which is as under :
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