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Issues:
Imposition of service tax on an Architect, penalty under sections 76 and 77 of the Finance Act, enhancement of penalty by the Commissioner, applicability of section 80 of the Finance Act, 1994, reasonable cause for failure to pay tax, payment of tax and interest by the appellant, harshness of penalty on a small taxpayer. Analysis: The appellant, an Architect, faced a case where the original authority confirmed service tax and interest payment, along with penalties under sections 76 and 77 of the Finance Act, 1994. The jurisdictional Commissioner revised the order, significantly enhancing the penalty under section 76. The appellant argued lack of awareness of tax liability, no intent to evade tax, and the harshness of the enhanced penalty. The Tribunal noted the provision of section 80 of the Finance Act, 1994, which exempts penalties if a reasonable cause for failure is proven. The appellant had paid the full tax and interest, neutralizing any pecuniary advantage, falling within section 80. The Tribunal deemed the enhanced penalty unduly harsh for a small taxpayer, setting aside the Commissioner's order and restoring the penalty to the original amount determined by the adjudicating authority. In conclusion, the Tribunal found in favor of the appellant, emphasizing the application of section 80 of the Finance Act, 1994, and the disproportionate nature of the enhanced penalty on a small taxpayer. By setting aside the Commissioner's order and reinstating the original penalty amount, the Tribunal provided relief to the appellant, highlighting the importance of considering reasonable causes for tax-related failures and the impact of penalties on different categories of taxpayers.
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