2007 (6) TMI 520 - AT - Central Excise

Reduction of penalty - delay in payment of service tax repeatedly - Held that - amnesty scheme was introduced in 2004 allowing the assessee to pay Service Tax along with interest and even though the amnesty scheme did not provide for non-imposition of penalty - penalty reduced.

Summary

Issues: Reduction in penalty under section 80 of the Finance Act, 1994.

Analysis:
The appeal involved a dispute over the reduction of a penalty imposed by the Commissioner (Appeals) from Rs. 1,000 to Rs. 1,02,581 due to repeated delays in service tax payment. The appellant argued that an amendment to section 76 in 2004 introduced a penalty of Rs. 100 per day for failures from that date onwards, making the earlier penalty invalid. Additionally, the appellant sought leniency citing payment of tax with interest and the existence of doubts regarding tax liability for architects. The Departmental Representative contended that the minimum penalty under section 76 remained Rs. 100 per day, as established in the ETA Engg. Ltd. case. The Tribunal noted the precedent set by the Larger Bench in ETA Engg. Ltd., confirming the Rs. 100 per day penalty under section 76. Despite repeated delays in tax payment, the Tribunal considered the amnesty scheme of 2004, which allowed payment of tax with interest and had been used to waive penalties in similar cases. Consequently, the penalty was reduced from Rs. 1,12,581 to Rs. 20,000 based on the appellant's compliance with tax payment and interest obligations.

The Tribunal's decision clarified the applicability of the penalty provisions under section 76, emphasizing the Rs. 100 per day penalty established in prior legal precedents. The Tribunal also considered the circumstances surrounding the repeated delays in tax payment, acknowledging the impact of the 2004 amnesty scheme on penalty waivers. By reducing the penalty from Rs. 1,12,581 to Rs. 20,000, the Tribunal balanced the need for penalty imposition with the appellant's adherence to tax payment and interest obligations, aligning with the Tribunal's consistent approach in similar cases.