2016 (2) TMI 961 - HC - VAT and Sales Tax

Imposition of penalty u/s 76 and 78 of the Act - invocation of Section 80 of the Act - services of cable operator and Broadcasting Agency - The services of cable operator were brought under the service tax net w.e.f. 16.8.2002 whereas services of Multi System Operator became taxable w.e.f. 10.9.2004. The respondent found that the appellant during the years from 2001-02 to 2004-05 had rendered above said services but failed to pay service tax amounting to ₹ 11,46,537/- - whether imposition of penalty justified? - Held that - While considering the scope and ambit of Sections 76 and 78 of the Act, this Court has held in Commissioner of Central Excise vs. M/s Pannu Property Dealers, Ludhaina case 2010 (7) TMI 255 - PUNJAB AND HARYANA HIGH COURT that Sections 76, 77 and 78 of the Act, do not envisage imposition of simultaneous penalties. This apart, the matter relating to short payment of tax as well requires to be re-examined by the Tribunal - without expressing any opinion on the merits of the appeals and as to the rights of the parties, the appeals are allowed, the impugned orders passed by the Tribunal are set aside and the matters are remanded to the Tribunal, for adjudication afresh on all the issues in accordance with law.

Summary

Issues:
1. Imposition of penalties under Sections 76 and 78 of the Act simultaneously.
2. Entitlement to benefit of immunity from penalty under Section 80 of the Act.
3. Whether the impugned order is contrary to the law.

Analysis:
1. The judgment pertains to two appeals under Section 35G of the Central Excise Act, 1944, challenging the order of the Customs Excise and Service Tax Appellate Tribunal. The appellant, engaged in cable operator and broadcasting services, was found to have evaded service tax. The Adjudicating Authority confirmed the demand and imposed penalties under various sections. The Commissioner (Appeals) set aside the penalties, but the Tribunal upheld them, leading to the present appeals.

2. The primary issue was whether penalties under Sections 76 and 78 of the Act can be imposed simultaneously. The Tribunal had upheld the penalties, stating that even though the assessee cooperated in the investigation, short payment of tax warranted penalty under Section 78. The appellant argued that previous judgments held that simultaneous penalties are not envisaged under the Act. The High Court agreed, citing precedents, and remanded the matter for re-examination by the Tribunal.

3. The appellant also contended that the Tribunal's finding of non-depositing 25% penalty within one month was factually incorrect. The High Court did not delve into the merits but set aside the Tribunal's orders, remanding the case for fresh adjudication on all issues in accordance with the law.

In conclusion, the High Court allowed the appeals, emphasizing that Sections 76, 77, and 78 of the Act do not permit simultaneous penalties and directed the Tribunal to re-examine the matter. The judgment focused on legal interpretations and procedural correctness, ensuring a fair adjudication process for the parties involved.