2011 (1) TMI 390 - AT - Service Tax

Enhancing the penalty u/s 78 - Since, the dispute relates to enhancement of penalty by the order of the revision authority from Rs. 1,42,550 to Rs. 1,95,328 - The facts on record reveal that against the very same order of the original authority dated 29-12-2008, the appellant filed an appeal before the Commissioner (Appeals) and the Commissioner (Appeals) after carefully considering the submissions from both sides set aside the penalty under section 76 and upheld the penalty of Rs. 1,42,550 under section 78 - Thus, it is clear that sustainability of penalty under section 78 was an issue before the Commissioner (Appeals) - In these circumstances, the Commissioner was not justified in enhancing the penalty from Rs. 1,42,550 to Rs. 1,95,328 - Decided in favour of assessee.

Summary

Issues:
Appeal against the order revising penalty under section 78 of the Finance Act, 1994.

Analysis:
The case involved an appeal against the revision of penalty under section 78 of the Finance Act, 1994. The original authority had imposed a penalty of Rs. 1,42,550, which was revised to Rs. 1,95,328 by the Commissioner under section 84. The appellant had challenged both penalties imposed under sections 76 and 78 before the Commissioner (Appeals). However, the Commissioner issued the impugned order enhancing the penalty under section 78 without being made aware of the appeal proceedings before the Commissioner (Appeals). The key contention was whether the Commissioner was justified in enhancing the penalty when the sustainability of the penalty under section 78 was already an issue before the Commissioner (Appeals).

The appellant argued that since both penalties under sections 76 and 78 were challenged before the Commissioner (Appeals), the initiation of revision proceedings under section 84 proposing an enhancement of penalty under section 78 was impermissible. The appellant acknowledged that these facts were not brought to the notice of the Commissioner during the revision proceedings. On the other hand, the Departmental Representative (DR) submitted that the records did not indicate that the Commissioner was informed about the appeal proceedings before the Commissioner (Appeals) against the original order dated 29-12-2008.

After considering the submissions from both sides and examining the records, the Tribunal found that the dispute primarily revolved around the enhancement of penalty from Rs. 1,42,550 to Rs. 1,95,328 by the revision authority. It was noted that the appellant had already appealed before the Commissioner (Appeals) against the original order, and the Commissioner (Appeals) had upheld the penalty of Rs. 1,42,550 under section 78 while setting aside the penalty under section 76. The Tribunal concluded that since the sustainability of the penalty under section 78 was already under consideration before the Commissioner (Appeals), the Commissioner was not justified in enhancing the penalty. As a result, the Tribunal allowed the appeal by quashing the enhancement of penalty to Rs. 1,95,328, reverting it to the original penalty amount of Rs. 1,42,550.