2005 (4) TMI 598 - AT - Service Tax

Summary

Issues:
1. Condonation of delay in filing Cross-objection.
2. Reduction of penalty imposed on respondents.
3. Validity of Cross-objection against penalty.
4. Interpretation of provisions for filing Cross-objection.
5. Justifiability of show cause notice issued.
6. Effect of subsequent amendments on show cause notice.

Analysis:

1. The respondents sought condonation for a 30-day delay in filing the Cross-objection, attributing it to the process of collecting necessary papers and consulting with Counsel. The Tribunal accepted the reasons provided and condoned the delay.

2. The Revenue appealed against the reduction of penalty on respondents to Rs. 1 lakh. The Revenue argued for a penalty of Rs. 100 per day for late service tax return filing under Section 76 of the Finance Act, 2000. However, the respondents contended that the show cause notice was issued in line with a revalidation of the Act, citing a previous Tribunal decision in their favor.

3. The Revenue claimed that the Cross-objection filed by the respondents was not permissible, citing a precedent where such objections were disallowed if the Department was not aggrieved. However, the Tribunal referred to Section 35B(4) of the Central Excise Act, treating Cross-objections as separate appeals. The Tribunal also relied on a Madras High Court ruling emphasizing the independent disposal of Cross-objections.

4. The Tribunal addressed the Revenue's argument that Cross-objections cannot be filed against unchallenged portions of an order. By referencing legal provisions and judicial decisions, the Tribunal concluded that Cross-objections are to be treated as separate appeals and disposed of independently, rejecting the Revenue's contention.

5. The Tribunal considered a show cause notice issued in 2002 and referenced a previous case to determine the justifiability of the notice. The Tribunal analyzed subsequent amendments under the Finance Act, 2003, affecting the period from 16-7-1997 to 16-10-1998, ultimately setting aside the demand for service tax and penalty.

6. Based on the Tribunal's analysis, the demand for service tax was deemed unsustainable, leading to the allowance of the Cross-objection and setting aside of the demand and penalty. Consequently, the Revenue's appeal became infructuous, resulting in its dismissal.