The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), confirmed the service tax demand as reasonable cause for delayed payment not proved under Section 80 of Finance Act, 1944.
It was noticed that the appellant, M/s. Kaveri Warehousing Pvt. Ltd, had a centralized registration at Chennai for their various branches situated all over India. The appellants were collecting service tax for rendering Storage and Warehousing Services but did not pay service tax for the period from February 2009 to December 2009.
The verification culminated into issue of Show Cause Notice (SCN) demanding service tax of Rs.4,15,36,896/- on Storage and Warehousing Service for the period from February 2009 to December 2009 besides demanding interest and imposition of penalty. After due process of law, the Commissioner of Service Tax vide the impugned order confirmed the duty demanded along with interest and imposed penalties. Aggrieved by the said order, the appellant is before this Tribunal assailing the findings and order.
The counsel for the appellant submitted that the demand of Service Tax on the ground that the appellant is ineligible for credit of Rs.4,05,781/-, out of the total Cenvat credit paid towards duty was incorrect. It was stated that since the Department did not question the eligibility of cenvat credit used to set off the liability in the SCN the same cannot be denied by the adjudicating authority vide the impugned order.
The counsel referred to Board’s Letter F.NO. 137/167/2006-CX.4 dated 3-10-2007 which prescribes conclusion of proceedings against such person who satisfies the provision of section 73(3) of the Finance Act, 1994. Further this is not merely a conclusion under sub-section (1), but conclusion of all proceeding against such person including those under sections 76, 77 and 78 of the Finance Act.
The ST-3 Return has the columns to show the cash/CENVAT credit balance lying with them and the tax due but not paid. Suppressing these facts by not filing their Returns, even after having collected the tax from their customers, is a clear case of suppression of vital information with intention to evade payment of duty.
The appellant had a cenvat credit balance of Rs 1,81,38,234/- but did not use it to pay long outstanding tax dues, although they could not have used it to settle other outstanding payments to third parties, if any. Clubbing this with their non-filing of ST-3 Returns clearly shows their intention to evade payment of duty.
A Two-Member Bench comprising P. Dinesha, Member (Judicial) and M. Ajit Kumar, Member (Technical)observed that “As per the general rule of legal proceedings, he who asserts must prove. It was for the appellant to prove financial constraint before the original authority and thereby plead ‘reasonable cause’ for delayed payment. A bald statement of financial constraint will not be enough.”
“We find that the appellant has not shown ‘reasonable cause’ within the meaning of Section 80 ibid for their failure to pay duty” the Bench concluded.
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