2006 (2) TMI 645 - AT - Service Tax

Summary

Issues:
1. Imposition of service tax and penalties on an Architect.
2. Appeal against the penalties imposed under Section 76 and Section 77 of the Finance Act, 1994.
3. Application of Section 80 of the Finance Act, 1994 for penalty imposition.

Analysis:
1. The appellant, an Architect, was subjected to service tax, interest, and penalties by the original authority, which were later revised and enhanced by the jurisdictional Commissioner. The appellant argued that he was unaware of the tax liability and had no intention to evade taxes, pleading for a reduction in the enhanced penalty.

2. The Tribunal observed that the Commissioner failed to consider Section 80 of the Finance Act, 1994, which provides relief from penalties if the assessee proves a reasonable cause for the failure. The appellant had paid the tax and interest in full, neutralizing any pecuniary advantage gained. The Tribunal noted that the appellant's case fell under the purview of Section 80, and the revised penalty was deemed unduly harsh for a small taxpayer.

3. Consequently, the Tribunal set aside the impugned order, restoring the penalty amount under Section 76 to the originally determined &8377; 4,000. The Tribunal emphasized that the appellant's compliance with tax payment and the provisions of Section 80 warranted a reduction in the penalty. Thus, the appeal was allowed, providing relief to the appellant in line with the legal provisions and the circumstances of the case.