2007 (3) TMI 741 - AT - Service Tax

Summary

Issues involved: Appeal against waiver of penalty u/s 76 and 77 of Finance Act, 1994.

Summary:

Issue 1: Revenue's appeal against waiver of penalty
The Revenue appealed against the waiver of penalties imposed u/s 76 and 77 of the Finance Act, 1994. The Revenue argued that the respondent should be equally treated under the law, emphasizing that mere payment of tax does not absolve one from penalties. Reference was made to a Larger Bench decision supporting this stance.

Issue 2: Respondent's defense against penalties
The respondent, represented by Shri P.K. Sen, contended that the levy of service tax was a new concept causing confusion. The respondent cooperated with the revenue, discharged the tax liability upon understanding the law, and filed returns for different periods. The respondent's delay in discharging the tax liability was attributed to the confusion surrounding the new levy and the Department's public relation announcements.

Judgment:
After hearing both sides, it was acknowledged that the respondent had eventually paid the tax liability albeit belatedly. The confusion surrounding the new levy and the Department's announcements were considered as mitigating factors. Section 80 of the Finance Act, 1994, provides for exoneration from penalties in case of a reasonable cause, which was supported by a cited decision. The lower appellate authority's reasoned decision to waive the penalty was upheld as it did not warrant imposition of penalties. Upholding the order of adjudication was deemed necessary to serve justice, leading to the dismissal of the Revenue's appeal.