In the absence of any documentary evidence ,whether the cum tax benefit be granted to the assessee and whether the reduction of penalty below minimum limit is sustainable in law?

PJ/CASE LAW/2015-16/2803

Case-COMMISSIONER OF C. EX., AURANGABAD VersusRUDRA GALAXY CHANNEL LTD.

Citation-2015 (38) S.T.R. 445 (Tri. - Mumbai)

Brief Facts-Vide the impugned order, the ld. Commissioner while confirming the demand of Rs. 11,23,798/- along with interest thereon for the period 1-11-2004 to 30-9-2005 on the appellant, M/s. Rudra Galaxy Channel Ltd. has reduced the penalty imposed on the appellant to Rs. 4,50,000/-. The appellant, M/s. Rudra Galaxy Channel Ltd. are aggrieved of the said order on two grounds. The first ground taken is that though they are not disputing the tax liability, the consideration received should be treated as cum tax. The second ground taken is that the penalty should be waived.

Appelants Contention-The Revenue has also come up with appeal against the said order on the ground that reduction of penalty to Rs. 4.5 lakhs by the appellate authority is incorrect in law. Inasmuch as the minimum penalty imposable was equal to the tax demand confirmed and the maximum amount of penalty imposable was twice the amount of tax demand confirmed, there is no discretion given to the lower appellate authority to reduce the penalty below the minimum limit prescribed in the law. The ld. AR appearing for the Revenue submits that the reduction in penalty by the lower appellate authority is incorrect in law and relies on the decision of the Hon’ble High Court of the Rajasthan in the case of UOI v. Shiv Ratan Advertisers [2008 (12)S.T.R.690 (Raj.)] wherein it was held that penalty is not reducible below the minimum prescribed. As regards, the abatement towards the Service Tax from the total consideration received, the ld. Additional Commissioner (AR) submits that there is nothing on record to show that the appellant had collected the consideration inclusive of Service Tax and there is no documentary evidence to support this claim. Therefore, in view of the decision of the Hon’ble Apex Court in the case of Amrit Agro Industries Ltd. v. CCE, Ghaziabad - 2007 (210)E.L.T.183 (S.C.) the appellant is not entitled for the benefit of cum tax value.

Respondents Contention-When the case came up for hearing earlier on 21-6-2013, then also none appeared; thereafter the case was adjourned to 13-8-2013, 19-9-2013, 31-10-2013 and finally today. Today is the fifth time the appeal is coming up for hearing and none appeared for the appellant. Therefore, we take up the appeal for consideration and disposal as a number of opportunities has provided to the appellant for defending his case which he has not availed.

Reasoning Of Judgement-The tribunal have considered the submission made by the ld. AR and perused the records.From the appeal memorandum it is evident that the appellant is not disputing the tax liability. However, he is seeking abatement towards the tax from the total consideration received; however, there is no documentary evidence available on record to show that the amount received by the appellant was cum tax. In the absence of such a documentary evidence it is difficult to accept the submission of the appellant that consideration received should be treated as cum tax. In the Amrit Agro Industries Ltd. case (supra) the Hon’ble Apex Court held that unless it is shown by the manufacturer that price of goods includes excise duty payable by him, no question of exclusion of duty element from price will arise for determination of value. Thus, in the absence of any documentary evidence, cum tax benefit cannot be granted to the appellant. Thus, the tribunal is unable to consider the plea of the appellant that consideration received should be treated as cum tax. As regards the penalty, the rule as it stood in the relevant time prescribed a minimum penalty equal to the Service Tax demand confirmed and a maximum penalty which was twice the amount of Service Tax confirmed. Therefore, discretion was available to the appellate authority only within the minimum value and the maximum value and there was no discretion given to the authority under the law for reducing the penalty. Therefore, following the decision in the case of Shiv Ratan Advertisers (cited supra), the reduction in penalty by the lower authority below the minimum prescribed is not sustainable in law. Consequently, the appellant would be liable to pay penalty equal to the Service Tax demand confirmed in the order of the adjudicating authority. Thus, the appeal filed by the appellant, M/s. Rudra Galaxy Channel Ltd. is rejected and the appeal filed by the Revenue is allowed.

Decision-Appeal filed by the revenue is allowed

Comment-The analogy in the case is that the benefit of cum tax would be availed by the assessee only if he is able to provide the documentary evidence showing that the amount received by the assessee was cum tax and regarding the penalty issue the discretion is only between the minimum and maximum value and no discretion is given to the authority under the law for reducing the penalty. Hence following the remarkable decision in the case of Shiv Ratan Advertisers the reduction in penalty by the lower authority below the minimum prescribed is not sustainable in law.

Prepared By-Neelam Jain

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PJ/CASE LAW/2015-16/2803

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