2010 (7) TMI 400 - AT - Service Tax

Penalty delay in payment of service tax - Commissioner (Appeals) has set aside the penalty imposed on the appellants under Section 76 of the Finance Act, 1994 and has upheld the penalty imposed under Section 78 of the Act - Section 78 applies where there is fraud, collusion, mis-statement or suppression - Delayed payment of service tax, therefore, does not come under the ambit of Section 78 Held that - penalty upheld under Section 78 by the lower appellate authority requires to be set aside - Section 76 would have been more appropriate for imposition of penalty in this case which covers cases of failure to pay service tax - authority has set aside the penalty imposed under Section 76 and the department has not come in appeal against this order

Summary

The Appellate Tribunal CESTAT, Chennai set aside penalty under Section 76 but upheld penalty under Section 78. Section 78 applies to cases of fraud, collusion, mis-statement, or suppression. Delayed payment of service tax does not fall under Section 78. The penalty under Section 78 was set aside, and the appeal was allowed. Section 76 would have been more appropriate for penalty in this case.