2010 (8) TMI 192 - AT - Service Tax

Waiver of the penalty - dropped the penalty under Section 76 of the Finance Act, holding that the two provisions are manually (sic) (mutually) exclusive and the case where guilty mind does not exist, will fall under Section 76 while those where such mens rea is required, will fall under Section 78 - Held that - order penalty under Section 78 has been rightly imposed on the respondent and penalty under Section 76 has been rightly dropped by the learned Commissioner (Appeals) - Appeal is rejected

Summary

Issues: Appeal against dropping of penalty under Section 76 of the Finance Act, 1994.

Analysis:
The appellate authority confirmed the service tax demand, interest, and penalty under Section 78 of the Finance Act but dropped the penalty under Section 76. It was held that the two provisions, Section 76 and Section 78, are mutually exclusive. Section 76 applies when there is no guilty mind, while Section 78 applies when mens rea is required. The tribunal cited a previous case where it was established that imposing double penalty under both sections is not warranted when a person is found guilty of evasion of service tax due to suppression or concealment. The respondent sought the benefit of Section 80 for waiver of the penalty under Section 78, but this was not considered valid as the respondent had suppressed facts regarding the duration of providing services in their service tax registration application.

The tribunal agreed with the observations of the Commissioner (Appeals) that the penalty under Section 78 was rightly imposed, while the penalty under Section 76 was rightly dropped. Consequently, the impugned order was upheld, and the appeal by the Revenue was rejected. The cross-objection of the respondents was disposed of accordingly.