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2015 DIGILAW 776 (GUJ)

Ronak Shipping v. Union of India

2015-08-06

A.J.DESAI, ABDULLAH GULAMAHMED URAIZEE

body2015
ORDER A.J. Desai, J. 1. Heard Mr. Paresh Dave, learned advocate appearing for the petitioners and Mr. Darshan Parikh, learned advocate appearing for respondent No. 4. Though served, respondent Nos. 1 to 3 have chosen not to appear before this Court. 2. By way of the present petition under Articles 14, 19(1)(g), 265, 300-A as well as 226 of the Constitution of India, the petitioners have prayed as under: "13(A) That Your Lordships may be pleased to issue a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, order or direction thereby quashing and setting aside order No. A/11168/2014 dated 02.07.2014 passed by the Appellate Tribunal, OIA No. RJT-EXCUS-OOO-APP-680-13-14 dated 10.02.2014 passed by the Commissioner (Appeals) and OIO No. 122/JC/2012 dated 31.12.2012 passed by the Joint Commissioner of Central Excise; (B) That Your Lordships may be pleased to issue a writ of mandamus or any other appropriate writ, order or direction thereby directing the Commissioner of Central Excise (Appeals), Rajkot to hear and decide on merits the petitioner's appeal filed against OIO No. 122/JC/2012 dated 31.12.2012 without considering it to be barred by limitation; (C) Pending hearing and final disposal of the present petition, Your Lordships may be pleased to restraint the respondents, their servants and agents from taking any action including any coercive recovery against the petitioners pursuant to order No. A/11168/2014 dated 02.07.2014 passed by the Appellate Tribunal, Ahmedabad; (D) An ex-parte ad-interim relief in terms of Para 13(C) above may kindly be granted; (E) Any other further relief that may be deemed fit in the facts and circumstances of the case may also please be granted." 3. By an order dated 02/07/2014 learned Appellant Tribunal has rejected the appeal preferred by the petitioner challenging the order dated 10/02/2014 passed by the Commissioner (Appeals), Rajkot, who has refused to condone the delay in preferring the appeal, in which the order of Joint Commissioner, Central Excise, Rajkot dated 31/12/2012 passed under the provisions of Chapter 5 of the Finance Act, 1994 (hereinafter referred to as "the Act"), was challenged. 4. Since both the authorities below have not condoned the delay, it was argued by Mr. Paresh Dave, learned advocate for the petitioners that the delay may be condoned and the appeal may be heard afresh on merits. 4. Since both the authorities below have not condoned the delay, it was argued by Mr. Paresh Dave, learned advocate for the petitioners that the delay may be condoned and the appeal may be heard afresh on merits. It was brought to the notice of this Bench that the question, which is involved in the present petition, for the period of limitation, was referred to Larger Bench vide order dated 06/01/2015 in Special Civil Application No. 18542 of 2014. Therefore, the present petition was also ordered to be heard along with Special Civil Application No. 18542 of 2014 and Full Bench formulated the following questions for determination: (1). Whether the period of limitation provided of 60 days, for filing an appeal under Section 35 of the Central Excise Act, 1944, could be extended only upto 30 days as provided by the proviso or the delay beyond the period of 90 days could also be condoned in filing an appeal? (2). Where a statutory remedy or appeal is provided under Section 35 of the Central Excise Act, 1944 and the delay cannot be condoned under Section 35beyond the period of 90 days, then whether Writ Petition under Article 226 of the Constitution of India would lie for the purpose of condoning the delay in filing the appeal? (3). When if the statutory remedy or appeal under Section 35 is barred by the law of limitation whether in a Writ Petition under Article 226 of the Constitution of India, the order passed by the original adjudicating authority could be challenged on merits? 5. By CAV judgment dated 13/03/2015, Full Bench answered the questions and the matters were ordered to be placed before appropriate Bench for further consideration. The questions were answered in Para-31 of the said CAV judgment, which reads as under: "31. We may now proceed to answer the question- (1) Question No. 1 is answered in negative by-observing that the limitation provided under section 35 of the Act cannot be condoned in filing the appeal beyond the period of 30 days as provided by the proviso nor the appeal can be filed beyond the period of 90 days. (2) The second question is answered in negative to the extent that the petition under Article 226 of the Constitution would not lie for the purpose of condonation of delay in filing the appeal. (2) The second question is answered in negative to the extent that the petition under Article 226 of the Constitution would not lie for the purpose of condonation of delay in filing the appeal. (3) On the third question, the answer is in affirmative, but with the clarification that- A) The petition under Article 226 of the Constitution can be preferred for challenging the order passed by the original adjudicating authority in following circumstances that- A. 1) The authority has passed the order without jurisdiction and by-assuming jurisdiction which there exist none, or A. 2) Has exercised the power in excess of the jurisdiction and by overstepping or crossing the limits of jurisdiction, or A. 3) Has acted in flagrant disregard to law or rules or procedure or acted in violation of principles of natural justice where no procedure is specified. B) Resultantly, there is failure of justice or it has resulted into gross injustice. We may also sum up by saying that the power is there even in aforesaid circumstances, but the exercise is discretionary which will be governed solely by the dictates of the judicial conscience enriched by judicial experience and practical wisdom of the judge." In view of the above answers given by Full Bench, the petition needs to be dealt with accordingly. It is specifically held by the Larger Bench that the limitation provided under section 35 of the Act cannot be condoned in filing the appeal beyond the period of 30 days as provided by the proviso nor the appeal can be filed beyond the period of 90 days. Second question is answered in negative to the extent that the petition under Article 226 of the Constitution would not lie for the purpose of condonation of delay in filing the appeal. 6. Aside from the issue of limitation, the questions involved in the present petition and Special Civil Application No. 18542 of 2014 were different, therefore, vide order dated 09/07/2015, both these petitions were segregated and Registry was directed to list the present petition separately. Accordingly, the present petition is taken up for final hearing today. Now, therefore this Division Bench has only to consider whether the case of the petitioners falls in any of the parameters prescribed by the Larger bench while answering Question No. 3. 7. Mr. Accordingly, the present petition is taken up for final hearing today. Now, therefore this Division Bench has only to consider whether the case of the petitioners falls in any of the parameters prescribed by the Larger bench while answering Question No. 3. 7. Mr. Paresh Dave, learned advocate appearing for the petitioners would submit that when the petition was filed there were several judgments of different Division Bench, which have entertained the petitions challenging the decision of Tribunal refusing to condone the delay in preferring the appeal and appropriate averments and relevant documents have been produced along with the petition. He would submit that the impugned order dated 31/12/2012 passed by the Joint Commissioner of Central Excise imposing demand of service tax along with penalty, is also challenged, on its merits. By taking us through the averments made in para-8 of the petition, he would submit that the case of the petitioners would fall under answer No. 3 (A. 1 and A. 2). On this premise, he would submit that the authority has no jurisdiction to impose penalty u/s. 78 of the Act. He would submit that the authority has also exercised the power in excess of its jurisdiction while imposing penalty u/s. 78 of the Act. He would submit that though the petitioners were able to establish that they have already paid service tax, the authority has not properly dealt with the case of the petitioners and, therefore, the impugned order is required to be quashed and set aside. He would submit that certain details were produced by the petitioners along with the appeal preferred before the Commissioner (Appeals), however, since the appeal is not decided on merits, resultant effect would be gross injustice to the petitioners, who have paid the service tax, which has now be levied on respondent authority. 8. Mr. Paresh Dave, learned advocate for the petitioners would further submit that the case of the petitioners does not fall in any of the reasons provided for laving penalty for suppressing, etc. of value of taxable services under section 78 of the Act and, therefore, the authority has committed an error in exercise of its powers. 8. Mr. Paresh Dave, learned advocate for the petitioners would further submit that the case of the petitioners does not fall in any of the reasons provided for laving penalty for suppressing, etc. of value of taxable services under section 78 of the Act and, therefore, the authority has committed an error in exercise of its powers. He would submit that it is not a case of either of fraud, collusion, willful misstatement, suppression of facts, or contravention of any of the provisions with regard to payment of service tax and, therefore, it would not have imposed penalty under section 78 of the Act. In support of his submission, he has relied upon the decision rendered in the case of Union of India V/s. Rajasthan Spinning & Weaving Mills reported in 2009 (238) E.L.T. 3 (SC) and submitted that the case of the petitioners would not fall within a meaning of "suppression" as held by the Apex Court while dealing with similar provision of section 11(A) of Central Excise Act, 1944. He would submit that "suppression" means failure to disclose full information with the intent to evade payment of duty/tax. When the facts are known to both the parties, omission by one party to do, what he might have done, would not render it suppression. He, therefore, would submit that the penalty ought not to have imposed by the impugned order. He would submit that since the case does not fall u/s. 78 of the Act and if the authority is of the opinion that the service tax was not paid, the authority should have imposed only penalty and the petitioner should have been penalised only u/s.77 of the Act. In support of his submission, he has relied upon the decision rendered in the case of Commissioner of Central Excise & Customs V/s. Saurashtra Cement Ltd. reported in 2010 (260) E.L.T. 71 (Guj) and submit that the impugned order may be quashed and set aside. 9. On the other hand, Mr. Darshan Parikh, learned advocate appearing for the respondent No. 4 has vehemently opposed this petition and raised objection with regard to maintainability of the present petition since the present petition was filed only with a prayer to get the matter remanded to the appellate authority for fresh consideration. 9. On the other hand, Mr. Darshan Parikh, learned advocate appearing for the respondent No. 4 has vehemently opposed this petition and raised objection with regard to maintainability of the present petition since the present petition was filed only with a prayer to get the matter remanded to the appellate authority for fresh consideration. He would submit that entire memo of the petition is based on the aspect of delay in preferring the appeal before the Commissioner (Appeals). He would submit that when the Larger bench has already held that the petition under Article 226 of the Constitution of India shall not be entertained to condone the delay, the present petition be summarily dismissed. He would submit that the case of the petitioners does not fall under any of the clarification made in para-31 of the judgment of the Larger Bench. He would submit that the authority has neither exceeded his jurisdiction nor has acted in absence of jurisdiction to deal with the case with regard to service tax, which the petitioners are bound to pay, considering the business carried out by him. He would submit that Hon'ble Apex Court in the case of Surya Dev Rai V/s. Ram Chander Rai reported in (2003) 6 SCC 675 has held that writ of certiorari under Article 226 of the Constitution of India, can be issued for correcting gross errors of jurisdiction. He would further submit that it has been held by Hon'ble Apex Court in the said decision, that where two inferences are reasonably possible and the subordinate court has chosen to take one view the error cannot be called gross or patent, which would call for any interference under Article 226 of the Constitution of India. He would submit that the case of the petitioners falls under Section 78 of the Act, so far as imposing penalty is concerned. He would submit that the case of the petitioners falls under one of the reasons i.e. suppression of facts, which is established from the facts and surrounding circumstances and conduct of the petitioners. The petitioners had not come forward to pay any service tax and the authority found out the evasion of payment of service tax only when the assessee company namely M/s. Dosti Fabricators was raided by the respondent authority. The petitioners had not come forward to pay any service tax and the authority found out the evasion of payment of service tax only when the assessee company namely M/s. Dosti Fabricators was raided by the respondent authority. By taking us through the impugned order, he would submit that though the petitioners were heard and sufficient opportunity was given for production of details about payment of service tax, as he claimed in the written submission, the petitioners could produce e-payment receipts only qua Rs. 5,74,9321-. He would submit that the case of the petitioners is exhaustively dealt with by the respondent and has rightly imposed penalty u/s.78 of the Act. He would submit that Directorate General of Central Excise Intelligence, Ahmedabad Zonal Unit raided the firm namely M/s. Dosti Fabricators situated at Jamnagar and during the search, it was found that another company in the name of Ronak Shipping (the petitioner) was also operating from the said office premises. It was found that the petitioners were registered with the service for "supply of Tangible Goods Services" for getting certain benefit having been involved in the said service. However, during the course of proceedings and as per statement of the partner of the petitioners, it revealed that a barge belongs to petitioner was being given on hire basis to various customers by the petitioners. Such business is subject to payment of service tax, which was not paid by the petitioners. Therefore, it is suppression of nonpayment of service tax. He, therefore, would submit that the petition may be dismissed. 10. We have heard learned advocates appearing for the respective parties. It is not in dispute that Director General of Central Excise, raided a premises, which was owned by M/s. Dosti Fabricators, Jamnagar. From the said premises, relevant records pertaining to taxable services provided by petitioner company were found out during search. It was found that the petitioners were operating business from the said premises of M/s. Dosti Fabricators. It was also found that petitioner's company owns one self propelled Barge and was providing this Barge on hire to various customers. The said business is subject to payment of service tax under the provisions of Finance Act and particularly Chapter No. 5 of the Finance Act. It was also found that petitioner's company owns one self propelled Barge and was providing this Barge on hire to various customers. The said business is subject to payment of service tax under the provisions of Finance Act and particularly Chapter No. 5 of the Finance Act. The payment of service tax was not made and on asking, it was admitted by partner of the petitioners that the same was not paid due to financial constraint. It also appears from the order that the petitioners had tried to establish that they had paid service tax on different dates and it was submitted that the details would be supplied to the authority, but the same were never supplied to the respondent authority. From whatever documents were found by the authority and produced by the petitioners, the respondent authority has accepted that some amount was paid by the petitioners with regard to service tax. Para 5.6 of the order reads as under: "5.6 On the basis of bills issued for hiring of barges and tugs during the years 2008-09 (from 16-05-2008 onwards) to 2010-11, it appeared that M/s. Ronak should have paid service tax of Rs. 23,02,368/- (Rupees twenty three lakh two thousand three hundred sixty eight only)(which includes education cess of Rs. 44,705/- and secondary & higher education cess of Rs. 22,353/-) excluding the amount of service tax paid prior to initiation of investigation by the DGCEI. Shri Jumma Sati in his statement dated 12-08-2011 has stated that they had paid service tax of Rs. 13,50,539/- (which includes education cess of Rs. 26,224/- and secondary & higher education cess of Rs. 13,112/-) along with interest of Rs. 1,36,201/- but no copy of GAR-7 challans or e-payment receipts were produced till the date of issue of this notice. However, he had produced copies of the following GAR challans as an evidence of payment of service tax of Rs. 5,74,932/- (which includes education cess of Rs. 11,164/- and secondary & higher education cess of Rs. 5,582/-) along with interest of Rs. 32,048/- during the course of investigation as detailed below: (amount in Rs.) Year Period Date of payment Service tax Edu. 5,74,932/- (which includes education cess of Rs. 11,164/- and secondary & higher education cess of Rs. 5,582/-) along with interest of Rs. 32,048/- during the course of investigation as detailed below: (amount in Rs.) Year Period Date of payment Service tax Edu. cess SHE Cess Interest Total 2009-10 April, 2009 to Sepr, 2010 31-03-2011 2,18,186 4364 2182 15334 2,40,066 2010-11 Jan,2011 to March, 2011 16-08-2011 3,40,000 6800 3400 16714 3,66,914 TOTAL 5,58,186 11164 5582 32048 6,06,980 It also appears that the petitioner had charged and collected the service tax from their customers but had not paid to the respondent authority. 11. As far as hearing of the petitioners is concerned, the same is referred in para-8 of the said order, which reads as under: "8. As no defence reply was filed by the noticee, a personal hearing was held on 30.08.2012. Shri R.T. Vajani, authorised representative of the noticee appeared for the personal hearing and informed that they have paid the tax along with interest and the difference is due to the reason that the investigating authorities have not verified all the bills. He promised to give a detailed reply by 17th or 18th September, 2012. More than three months has lapsed since the above date but no further submissions have been filed by the noticee. Hence, I treat it as if they do not have anything further to add on this issue. Therefore, I am deciding the case based on the evidences available on record." Paragraph Nos. 12 to 17 of the said order, are relevant to deal with the submissions made by learned advocate Mr. Paresh Dave about the levy of penalty u/s. 78 of the Act and, therefore, the same are produced as under: "12. During the personal hearing, the representative of the noticee had informed that the investigating authorities have not verified all the bills. He promised to give a detailed reply by 17th or 18th September 2012. More than three months has lapsed since the above date but no further submissions have been filed by the noticee. Hence, I decide that they have no more additional submissions to make and in view of the discussions in the preceding paras, I hold the entire demand in the show cause as confirmed. 13. More than three months has lapsed since the above date but no further submissions have been filed by the noticee. Hence, I decide that they have no more additional submissions to make and in view of the discussions in the preceding paras, I hold the entire demand in the show cause as confirmed. 13. It is seen that the noticee has been evading/suppressing the information from the department about the taxable services rendered by them under the category of supply of tangible goods service. This was unearthed when a search was conducted in the premises of M/s. Dosti Fabricators. Hence I decide that this is a clear case of suppression of facts and hence the demand raised by invoking the proviso to Section 73(1) of the Finance Act, 1994 is upheld. 14. Cum tax benefit cannot be granted in cases involving fraud, collusion, willful misstatement and suppression of facts with an intent to evade payment of tax. I rely upon the decision of the Tribunal in the case of Dhillon Coldrinks & Beverages Ltd. Vs. CCE Jalandhar 2011(263) ELT 241 (Tri-Del) which has placed reliance on the decision of the Hon'ble Supreme Court in case of Amrit Agro Industries Vs. CCE Ghaziabad 2007 (210) ELT 183 (SC). As already discussed above, since this is a case of suppression of facts with an intent to evade payment of tax, no cum tax benefit can be given. 15. Regarding imposition of penalty under Section 77 of the Finance Act, 1994, I find that the noticee have not filed any ST-3 return for the period under dispute, though they are well aware of the provisions of law and for such contraventions penalty under Section 77 of the Finance Act, 1994 is imposable. 16. It is seen that this non payment of tax would not have come to the notice of the department if the same was not detected during a search/enquiry against the noticee. Therefore the only conclusion that can be arrived at is that the noticee has deliberately suppressed the material facts from the department, so as to avoid the payment of service tax. Non-payment of service tax, at any point of time during the period under consideration shows their mala fide intention of evading the payment of service tax. Hence penalty under Section 78 of the Finance Act, 1994 is liable to be imposed upon them. 17. Non-payment of service tax, at any point of time during the period under consideration shows their mala fide intention of evading the payment of service tax. Hence penalty under Section 78 of the Finance Act, 1994 is liable to be imposed upon them. 17. Further, the fifth proviso to Section 78 provides that if the penalty is payable under this section, then the provision of Section 76 will not apply. I find that the show cause notice covers the period from 2009-10 onwards. The fifth proviso to Section 78 of Finance Act, 1994 has been added w.e.f. 10.5.2008 through a legislative amendment, providing that if penalty is payable under Section 78 ibid, the provisions of Section 76 shall not apply. Since I have decided to impose penalty under Section 78 the provisions of Section 76 will not be applicable as the period involved in this case is subsequent to the amendment made in 10.05.2008." 12. So far as written submissions made by the petitioners before the appellate authority is concerned, the same are produced along with the present petition. Though the petitioners had tried to supply the details about the payment of service tax, it appears that some of the amount had been paid subsequent to initiation of the present proceedings. By written submissions, the petitioners have tried to establish that some amount was paid but as observed by the authority referred hereinabove, no supporting document was produced by the petitioners. The details with regard to show called payment in the year 2009-2010, 2010-2011 which are alleged to have been paid, but no supporting documents have been produced by the petitioners even before this Court. It appears from the above facts and circumstances that the petitioners were running business for different purposes and for which, they were liable to pay service tax and, therefore, in our opinion, the petitioners have suppressed the above facts from the respondent authority to avoid payment of service tax. Unless M/s. Dosti Fabricators was raided and relevant documents were found out by the respondent, there would be non-payment of huge of service tax, which the petitioners are liable to pay. Therefore, in our opinion, the case is covered u/s. 78 of the Finance Act. Unless M/s. Dosti Fabricators was raided and relevant documents were found out by the respondent, there would be non-payment of huge of service tax, which the petitioners are liable to pay. Therefore, in our opinion, the case is covered u/s. 78 of the Finance Act. We are, therefore of the opinion that the case would not fall under any of the clarifications made in Answer No. 3 by larger bench warranting condonation of delay in filing the appeal. Hence, in our opinion, the decisions delivered by Division Bench of this Court, are not applicable since we are of the view that payment of service tax is suppressed by the petitioners. Hence, the petition is dismissed. Notice is discharged.