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Issues involved: Appeal against waiver of penalty by appellate authority based on reasonable cause u/s 80 of Finance Act, 1994.
The judgment addresses the appeal brought by the Revenue challenging the waiver of penalty by the appellate authority without any reason. The Revenue argued that the penalty should not have been waived as it serves as a remedial measure to deter deliberate defiance of the law. The Revenue relied on a larger Bench decision to support their contention. On the other hand, the authorized representative for the Respondent supported the order of the authorities below and requested no interference due to the reasoned order passed by the appellate authority. The Revenue contended that the waiver of penalty by the appellate authority disregarded the larger Bench decision and emphasized that upholding the order of adjudication would be just and proper. It was highlighted that the appellate authority had access to the relevant decision before passing the order, and the ignorance of such decision resulted in irreparable loss to the Revenue. The judgment pointed out that the argument presented by the Revenue failed to consider the overriding provision in section 80 of the Finance Act, 1994, which was discussed in the recorded judgment. The larger Bench decision had clarified that no penalty shall be leviable when there is a reasonable cause. Therefore, the controversy revolved around whether a reasonable cause existed for the appeal in question, necessitating a speaking order to address this issue. Due to the absence of any reason stated in the appeal order before the appellate authority, the matter required reconsideration in light of the provisions of section 80 of the Finance Act, 1994, along with the larger Bench decision. Consequently, the judgment set aside the matter to the appellate authority below to determine the existence of any reasonable cause for the decision that no penalty is warranted u/s 76, considering the provisions of Section 80. The appellate authority was instructed to provide a fair opportunity to the Respondent to explain the cause/reason for non-compliance with section 76 and to consider these reasons to reach an appropriate decision. The impugned order was remanded, and the Revenue succeeded partly in the appeal.
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