Full Judgment
3. The appellant during the pendency of the proceedings deposited Rs. 91,000/- with the department. Show cause notice was issued to the appellant for recovery of the amount of service tax for the period October, 1999 to December, 2003. The adjudicating authority confirmed the demand and also imposed equivalent penalty under Section 78 of the Finance Act, 1994 and penalties under Section 76 & 75A. The appellant discharged their service tax liability and interest under Section 75 along with 25% of the penalty imposed under Section 78 and preferred an appeal with the appellate authority. The appellate authority after hearing the appellant did not find any merit in the appellant's case and upheld the Order of the adjudicating authority.
4. Learned Advocate for the appellant submits that the appellate authority should have at least considered the fact that the appellants have deposited 25% of the penalty imposed upon them as per provision of Section 78 and at least should have waived the balance 75% of the penalty under Section 78 and granted some relief to the appellants. His second line of attack was for the penalty imposed under Section 76 & 75A of the Finance Act, 1994, for which he submits that C.B.E.C.Circular dated 20.9.2004 grants immunity from the pending proceedings to those people who have not registered themselves but come forward and got registered and paid service tax and interest by 30.10.2004. He submits that in this case the appellants have discharged the service tax liability as well as interest before 30.10.2004.
5. Learned D.R. on the other hand submits that the appellant is not an illiterate person and should have known the law about service tax on C & F agent and should have got himself registered. Instead of that the appellants did not even produce the documents which were required to produce by them. It is also the submission that there could not be any bonafide belief in the mind of the appellant, in respect of nonpayment of service tax as he was dealer of Indian Oil Corpn. and definitely he would have known about the implications of not getting registered. On the question of applicability of Circular of C.B.E.C. it is the submission, that it was done with a specific intention to get maximum service provider registered and this circular cannot be applied to the appellant's case as he was already registered with the authorities. He submits that the penalty imposed under Section 76 is minimum and there cannot be any further reduction in the penalty.
6. Considered the submissions of both sides and perused the record. I find from the record that the appellants have discharged the service tax liability and interest payable thereon along with 25% penalty before 30.10.2004. The appellant's advocate, at this stage, submits that he is not challenging 25% part of the penalty which he has deposited as per provisions of Section 78. I find from the provisions of Section 78 that the appellant is eligible to deposit 25% of the penalty along with service tax and interest thereon with the authorities within one month from the issuance of the order-in-original. In this case the appellants have deposited complete liability of service tax, interest and penalty within 30 days of the date of the order-in-original. Hence, they are eligible to claim the benefit extended under Section 78 of the Finance Act, 1994. The appellate authority in his Order-in-Original has not considered the implication of this provision and has upheld the total penalty imposed under Section 78. To my mind this would be a wrong proposition. Since me appellants have discharged their penal obligation under Section 78 to the tune of 25% of the penalty imposed the balance penalty under Section 78 is not liable to be paid by them. To that extent the Order-in-Appeal in this case is wrong and is set aside.
7. In respect of penalty under Section 76 and Section 75A of the Finance Act, 1994 I find that the Board vide its Circular No.137/39/2004-Cx.4 dated 20.9.2004 has directed field staff as follows: Subject: Extra Ordinary tax payer friendly scheme for instant registration of service providers.
Hon'ble Finance Minister has launched an extraordinary taxpayer friendly Scheme for registration of those service provider who have not got themselves registered so far. The details of the scheme are enclosed as annexure. This scheme aims to register all service providers on the basis of their declaration and who had earlier failed to register themselves with the department due to ignorance or any other reason with full waiver of penalty. This scheme is effective with immediate effect.
As per the scheme any service provider can make a declaration to the department with regards to his past liabilities towards the service tax and interest payable.Without any inquiry or questions, the departmental authorities will accept the declaration and on the spot give a registration to the service provider. Penal proceedings against the person approaching under this scheme will be completely waived off.
This scheme commences with immediate effect and will be operational only up to 30th October 2004 and no extension will be allowed. You should be publicize the scheme and organize sufficient numbers of camps to facilitate the service providers who wish to avail of the relaxations given under the scheme, through out your jurisdiction.
You should instruct your officers to be courteous and polite, they should not put any uncomfortable questions to the person opting for the scheme.
You should mobilize all the resources available with you in a judicious manner, so that enough number of officers is available for implementing the scheme.
It can be seen from the above that Board had directed the field staff not to proceed or initiate penal proceedings against the person approaching under this scheme and directed to waive of penalty, if such person pays service tax and interest. This scheme was operational up to 30.10.2004. If, in this case, the appellant would have delayed the adjudication and approached the authorities by first week of October, 2004 and discharged the service tax liability and interest, then the authorities would not have proceeded against him by imposing penalty under any of the provision. To my mind the Board itself wants to grant some kind of amnesty to the tax payers, who come forward under this scheme. In the present case the appellants undoubtedly have not got themselves registered, but it may be due to error or mis-interpretation of law which might have not been clearly understood by them. This itself gives them a leverage of seeking amnesty. To my mind the appellant would also get covered for the benefit of waiver of penalty imposed on them under Section 76 and 75A.7. In view of the above appeal is partly allowed. Service tax, interest thereon, and 25% of penalty which is already deposited by the appellant is upheld and penalties imposed upon the appellant under Section 76 & 75A are set aside. Appeal partly allowed.