2009 (7) TMI 1090 - Commissioner - Service Tax

Summary

Issues:
1. Appeal against Order-In-Original for non-payment of Service tax.
2. Dispute over penalty imposition under Section 76 of the Finance Act, 1994.
3. Appellant's contentions regarding penalty reduction and discretionary powers.
4. Adjudication of the case based on ST3 returns and late payment penalty calculation.

Issue 1: Appeal against Order-In-Original for non-payment of Service tax

The appeal was received from M/s. Ajjaree Engineering Industries Pvt. Ltd. against Order-In-Original No. 57/ADJ/STC/KOP-II/2008 for non-payment of Service tax for maintenance or repair services, erection and commissioning, and GTA services. A show cause notice was issued for the unpaid Service tax amount of Rs. 3,22,543/- during the specified period. The appellant contested the order, stating that there was no intention to evade tax as the demand was based on their filed ST3 returns.

Issue 2: Dispute over penalty imposition under Section 76 of the Finance Act, 1994

The appellant challenged the imposition of equal penalty under Section 76 of the Act, arguing that the penalty should not exceed Rs. 66,660/- based on the calculation method provided in the Act. The appellant relied on various decisions to support their contention that the penalty amount should be reduced considering the circumstances of the case. The adjudicating authority imposed the penalty equal to the Service tax amount, leading to the appeal against this penalty imposition.

Issue 3: Appellant's contentions regarding penalty reduction and discretionary powers

The appellant contended that they had already paid interest and penalizing them separately under Section 76 was unnecessary. They also argued that even if liable for penalty, it should not be equal to the Service tax amount. The appellant cited previous cases where authorities had discretion to reduce penalties and questioned the justification for imposing an equal penalty without proper explanation.

Issue 4: Adjudication of the case based on ST3 returns and late payment penalty calculation

During the Personal Hearing, the appellant requested a reduction in the equal penalty imposed under Section 76. The Commissioner reviewed the case records and agreed that there was no mala fide intention on the part of the appellant since the demand was based on their filed returns. The Commissioner analyzed the penalty calculation under Section 76, considering the lack of sufficient reasons for late payment. Ultimately, the Commissioner reduced the penalty from Rs. 3,22,543/- to Rs. 66,600/-, aligning it with the maximum penalty amount justified by the circumstances. The appeal was allowed with the modified penalty amount.

This detailed analysis covers the issues involved in the legal judgment, addressing the appellant's contentions, penalty imposition under Section 76, and the adjudication process based on ST3 returns and penalty calculations.