M/S. Dilip Kumar Nayak vs Commissioner Of Customs
2023 Latest Caselaw 8473 Ori

     IN THE HIGH COURT OF ORISSA AT CUTTACK
                           OTAPL No.12 of 2017
                           (Through Hybrid mode)

M/s. Dilip Kumar Nayak                          ....                      Appellant


                                     -versus-
Commissioner of Customs, Excise                 ....                   Respondent
and Service Tax, Bhubaneswar
Commissionerate-I


Advocates appeared in this case:

For appellant          :     Mr. A. K. Mohanty, Advocate

For respondent         :     Mr. T. K. Satapathy, Advocate
                            (Senior Standing Counsel, GST,
                             Central Tax & Customs)
CORAM:
                 JUSTICE ARINDAM SINHA
                 JUSTICE G. SATAPATHY


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Date of hearing and Judgment: 03.08.2023

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1. The appeal is directed against decision dated 23rd March, 2017

of the Customs, Excise Service Tax Appellate Tribunal, (CESTAT),

Eastern Zonal Bench: Kolkata (Appeal no.ST/99/11). Coordinate

Bench had admitted the appeal by framing the substantial question of

law reproduced below.

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"Whether the decision of the Commissioner of Income Tax as well as the order of affirmation by the CESTAT is sustainable, as it is held that Section-73(4), Chapter-V of the Finance Act, 1994 is applicable to the case of the appellant ?"

2. Mr. Mohanty, learned advocate appears on behalf of appellant

and draws attention to paragraph 5 of impugned decision to submit,

the service tax in respect of mining service came into effect from 1st

June, 2007. Subsequent thereto, there was Central Board of Excise

and Customs (CBEC) circular dated 3rd October, 2007. Placing

reliance on omitted section 80 in Finance Act, 1994 he submits that

the CESTAT committed error in not holding that his client was

covered by sub-section (3) in section 77 and said section 80.

3. Perused impugned decision. In paragraph 2 the CESTAT

recorded submission of appellant to also be that it had paid the duty

plus interest before issuance of show-cause notice. This appears to be

a fact as the Tribunal did not say otherwise in dealing with the case.

4. In context of our observation Mr. Satapathy, learned advocate,

Senior Standing Counsel appearing on behalf of the department

submits, it is apparent from impugned order that the determination

was accepted by petitioner and the tax paid after issuance of

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summons. Petitioner's challenge was directed against only the penalty

order. In the circumstances, the Tribunal correctly appreciated the

facts to be, petitioner had evaded payment of the tax by omission to

register, mandated by the provisions in the Act. He submits further,

the tax being indirect, petitioner consciously collected it but did not

register and pay the same. In the circumstances, provision in sub-

section(4) of section 73 eclipses application of provision in sub-

section (3) of section 73 and omitted section 80.

5. The question framed for answer is whether decision of the

Commissioner of Income Tax (CIT), affirmed by the CESTAT is

sustainable as it held section 73 (4) in chapter V of Finance Act 1994

to be applicable. To answer the question it is necessary to look at sub-

sections (1), (3) and (4) of section 73 read with sub-section (1) in

section 78.

6. Sub-section (1) of section 73 provides, the authority may

within 18 months from the relevant date serve notice on the person

chargeable with service tax, which has not, inter alia, been paid. The

proviso gives reasons that may extend the period to 5 years for notice

under it being issued.

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7. Sub-section (3) in section 73 says, inter alia, where before

service of notice under sub-section (1) in respect of service tax

payment is made, on receipt of the information the authority shall not

serve any notice under sub-section (1) in respect of the amount, so

paid. In this case there is no dispute on the charge and payment of

service tax. It is only the imposition penalty. Sub-section (4) in

section 73 provides for negating application of sub-section (3) on any

reason given in the section standing attracted. Sub-section (1) in

section 78 mandates that the person, who has evaded payment of

service tax, will be liable to pay a penalty. Requirement by the

provision is also that the person has been served notice under the

proviso to sub-section (1) of section 73.

8. As aforesaid, finding on fact is no notice was issued to

petitioner (assessee) under sub-section (1) of section 73. However,

sub-section (4) in section 73 includes reason of contravention of any

of the provisions in the chapter. Regarding this, demand-cum-show

cause notice dated 17th November, 2009 stood issued on petitioner,

invoking the proviso to sub-section (1) in section 73. In the

circumstances, by operation of sub-section (4) in section 73, provision

in sub-section (3) of said section became inapplicable to petitioner.

This is more so because under sub-section (1) of section 78, the

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requirement is for the person fixed with the liability of penalty to be

that he has been served notice under proviso to sub-section (1) of

section 73. The show cause notice dated 17th November, 2009 is such

notice. Sub-section (1) in section 73 provides for issuance of two

separate notices for distinct purposes. The first is the notice under

sub-section (1), which cannot be issued on prior payment of tax and

the other, under the proviso.

9. We answer the question in the affirmative and in favour of

revenue. Impugned order of the CESTAT and CIT are confirmed and

the appeal dismissed.

( Arindam Sinha ) Judge

( G. Satapathy ) Judge

Prasant

Signature Not Verified Digitally Signed Signed by: PRASANT KUMAR SAHOO Reason: Authentication Location: OHC Date: 03-Aug-2023 19:30:44