Can the revisionary authority revise the decision of the original authority if once the benefit under Sec 80 has been given?

PJ/Case Law /2016-17/3377

Case-S-MAC SECURITY SERVICES PVT. LTD. Versus COMMISSIONER OF S.T., BANGALORE

Citation- 2016 (45) S.T.R. 209 (Tri. - Bang.)

Brief Facts-The present appeal is directed against the order passed in Revision No. 33/2006, dated 17-8-2006 vide which the Commissioner in exercise of his revisionary power imposed the penalty which was dropped by the adjudicating authority in exercise of his power under Section 80 of the Act. Briefly the facts of the present case are that the appellant is engaged in providing security agency service and is liable to pay service tax w.e.f. 16-10-1998 and he has been paying the service tax and filing periodical returns. The dispute in the present appeal relates to the period 1-10-2003 to 31-3-2004 wherein there was a delay on the part of the appellant in making the payment of service tax as required under Section 68 of the Act read with Rule 6 of the Service Tax Rules, 1994. Subsequently the appellant paid the service tax due along with interest in terms of Section 75 of the Act. Thereafter a show cause notice dated 2-7-2004 was issued to the appellant. The appellant filed the detailed reply to the show cause notice stating the reasons for delay in filing the returns and has also stated that he has paid the service tax voluntarily along with interest under Section 75. The adjudicating authority vide Order-in-Original dated 19-8-2004 confirmed the service tax demand of Rs. 37,53,087/- (Rupees thirty seven lakhs fifty three thousand and eighty seven only) and appropriated the service tax amount voluntarily paid by the appellant and also appropriated the interest paid by the appellant but did not impose any penalty under Sections 76, 77 and 78 by exercising his judicial discretion vested in him under Section 80 of the Act. Subsequently the respondent-Commissioner reviewed the matter and issued a show cause notice under Section 84 of the Act proposing the imposition of penalty and after hearing the appellant passed the impugned order dated 17-8-2006 and imposed the penalties under Sections 76, 77 and 78 of the Act which is under challenge in the present appeal. We have heard the learned Counsel for the parties and perused the records.

Appellant’s Contention-Learned Counsel for the appellant admitted the delay in filing the half-yearly return for the period in dispute due to genuine reasons and due to financial crunch. He also submitted that the delay has occurred for the first time due to various bona fide reasons. He also submitted that the appellant voluntarily made the payment of service tax along with interest which is not disputed by the respondent. He also submitted that the adjudicating authority in Order-in-Original has recorded the finding that there was no mala fide intention on the part of the appellant to suppress the value of taxable service and also noted the fact of payment of service tax along with interest. After recording this finding the adjudicating authority did not choose to impose any penalty under Sections 76, 77 and 78 by exercising his judicial discretion vested in him under Section 80 of the Act. The learned Counsel further submitted that the revisionary authority does not have any power to interfere in the discretionary power of the adjudicating authority and in support of his submission he relied upon the following decisions :
(a)    Final Order No. 648/2012, dated 17-9-2012 passed by the Hon’ble CESTAT, Bangalore in the case of M/s. Lion Security Services, Bangalore.
(b)    CCE v. Darmania Enterprises - 2009 (14) S.T.R. 741 (P&H)
(c)    CST v. Handimann Services Ltd. - 2011 (24) S.T.R. 641 (Kar.)
(d)    CST v. Motor World - 2012 (27) S.T.R. 225 (Kar.)
(e)    Fortune Network Pvt. Ltd. v. CCE, Vadodara-II - 2015 (39) S.T.R. 689 (Tri.-Ahmd.)
         (f)     Aqua Master Clean v. CST, Ahmedabad - 2016 (42) S.T.R. 68 (Tri.-Ahmd.).
Respondent’s Contention-On the other hand the learned AR supported the order passed by the revisionary authority and submitted that the appellant did not furnish cogent and convincing evidences for late payment of service tax along with interest.
Reasoning Of Judgement-After going through the material on record, the Tribunal found that the original authority found the case fit for grant of benefit of Section 80 to the appellant and once the benefit has been given under Section 80, it was not open to the revisionary authority to revise such decision of the original authority. In this connection reliance is placed on the judgments passed by the Hon’ble High Court of Karnataka dated 21-4-2011 in Central Excise Appeal Nos. 1-15/2009 in Commissioner of Service Tax, Bangalore v. Motor World and Others reported in 2012-TIOL-418-HC-KAR-ST = 2012 (27) S.T.R. 225 (Kar.) cited supra. The learned Counsel referred to Para 34 of the Hon’ble High Court judgment which reads as follows :
“In this batch of cases, it is clear from some of the orders of the assessing/adjudicating authority that he was satisfied with the “reasonable cause” shown by the assessees but still penalty was imposed, not on the ground that there was no reasonable cause or that the reasons were not acceptable to him, but penalty was imposed in substance to educate the taxpayer about his moral responsibility. Unfortunately, the assessee has not challenged the said orders but has paid the same. In such circumstances, the revisional authority had no jurisdiction to interfere with the said orders as the authority below had held that there was sufficient cause for non-payment of duty. Therefore, the order passed by the revisionary authority is erroneous and calls for interference. Hence, no case for interference with the impugned order is made out. Hence, these appeals are dismissed. No costs.”
The Tribunal also went through the other judgments cited supra. Keeping in view the facts and circumstances and the judgments of the Hon’ble Karnataka High Court and the fact that the service tax along with interest has been paid voluntarily by the appellant, it chose to set aside the penalties imposed by the revisionary authority under Sections 76, 77 and 78 by denying the benefit of Section 80 of the Act which benefit has been given to the assessee on valid ground by the original authority. In the result, the impugned order imposing penalty is set aside and appeal is allowed.
(Order pronounced in open Court on 27-7-2016)

Decision-Appeal allowed.
Comment-The gist of the case is that the assessee made a delay in payment of Service Tax, but when indicated, he paid entire due tax with interest on his own and also showed sufficient reasonable cause to adjudicating authority for delay. So, the adjudicating authority waived the penalty. Subsequently, the revisionary authority imposed penalty. But, in view of decision in 2012 (27)S.T.R.225 (Kar.), the penalty imposed by the revisionary authority was not sustainable as once the benefit has been given under Section 80, the revisionary authority cannot revise the decision of the original authority. Accordingly, penalty was set aside as per Sections 80 of Finance Act, 1994.

Prepared By - Praniti Lalwani

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PJ/Case Law /2016-17/3377

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