The Chandigarh bench of Customs, Excise And Service Tax Appellate Tribunal (CESTAT) has held that no penalty is imposable in the absence of intent to evade tax. The Tribunal held that violation of non-filing of the returns under the existing law has not been saved under the present regime of GST.
M/s Vinayak Industries, the appellant engaged in the manufacture of ‘Tin Containers’ falling under Tariff Heading 73 of the First Schedule to the Central Excise Tariff Act, 1985. During an internal audit conducted by the Department, it was found that the appellant had not filed returns namely ER-4, ER-5, ER-6 and ER-7 for the period from February 2012 to March 2016; accordingly, a show cause notice was issued to the appellant on 23.04.2018 proposing to impose penalties amounting to Rs.96,000/- under Rule 12(6) and Rule 27 of the Central Excise Rules, 2002 and Rule 15A of the Cenvat Credit Rules, 2004 for non-filing of above-mentioned returns. After following the due process, the Adjudicating Authority confirmed the demand of penalties of Rs.96,000/- put together for non-filing the returns.
Counsel for the appellant submitted that the impugned order is not sustainable in law and is liable to be set aside as the same has been passed without properly appreciating the facts and the law and binding judicial precedents.
The penalties have been imposed by invoking the extended period of limitation without satisfying the requirement of invoking the extended period of limitation as provided under Section 73, sub-section (4) of the Finance Act, 1994.
It was submitted that the issuance of show cause notice after coming into force of CGST Act, 2017 is without jurisdiction because under the GST regime which was introduced w.e.f. 01.07.2017, the only saving clause is provided under Section 174 of the CGST Act, 2017, wherein the proceedings can continue under the new regime if the same is arising out of the investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and any other legal proceedings etc and as such the saving clause has no applicability with regard to the present proceedings.
He further submitted that under Rule 27 of the Central Excise Rules, 2002, the maximum penalty provided for violation of the rules is to the extent of Rs.5000/- only, whereas in the present case, penalties of Rs.96,000/- have been imposed.
On the other hand, reiterated the findings of the impugned order. She further submitted that in the era of self-assessment, the assessee must file the returns and non-filing of returns on time attracts penalties.
A single bench comprising Sh S S Garg, Member (Judicial) held that violation of non-filing of the returns under the existing law has not been saved under the present regime of GST. Nothing emerges from the impugned order that the appellant has not filed the requisite returns with intent to evade the payment of tax. The CESTAT held that the imposition of penalties amounting to Rs.96,000/- is not sustainable and set aside the impugned order by allowing the appeal of the appellant
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