2007 (4) TMI 699 - AT - Central Excise

Penalty u/s 76 - payment of tax before issuance of SCN - Invocation of section 80 - Held that - Ld. Commissioner (Appeals) has correctly invoked the provisions of section 80, as in this case it is on record that the respondent was not aware of the levy of service tax on services rendered by him - penalty not warranted - appeal dismissed - decided against Revenue.

Summary

Issues: Appeal against setting aside penalty under section 76 of the Finance Act, 1994.

Analysis:
1. The appeal was filed by the revenue challenging the Order-in-appeal dated 28-4-2006, which set aside the penalty imposed on the respondents under section 76 of the Finance Act, 1994.

2. In the absence of the respondent, the issue was taken up for disposal. The revenue argued that the respondent failed to pay service tax despite starting business in 2000 under the category of 'C & F Services', justifying the penalty imposed under section 76 by the adjudicating authority.

3. The Ld. Commissioner (Appeals) set aside the penalty under section 76, considering that the respondent had paid the complete service tax liability before the issuance of the show-cause notice. The Commissioner found that the respondent, being a new assessee, was not fully aware of the service tax imposition, which was a reasonable cause for waiving the penalty under section 80 of the Finance Act, 1994.

4. The Ld. Commissioner (Appeals) correctly applied the provisions of section 80, noting that the respondent was not aware of the service tax levy on the services provided. The respondent consistently maintained this stance, even when authorities visited the office and recorded statements. The decision was based on the fact that the service tax was paid before the show-cause notice was issued, and there was no evidence of the respondent collecting service tax but not paying it. Consequently, the appeal filed by the revenue was dismissed, upholding the Order-in-appeal that set aside the penalty under section 76 of the Finance Act, 1994.