2011 (4) TMI 332 - AT - Service Tax

Penalty u/s 78 - There is no dispute that the assessee had discharged tax due along with interest before the original authority passed the adjudication order - It is also undisputed that neither of the lower authorities indicated the option available to the assessee to pay 25% of the penalty within 30 days of the receipt of the respective orders in complete discharge of penal liability provided under Section 78 of the Act. In the K.P. Pouches (P) Ltd. case deciding a similar case, Hon ble Delhi High Court held that it was enough for the appellant to pay 25% of the penalty in complete discharge of its penal liability under Section 78 of the Act if it paid the said amount within 30 days of the said judgment. The assessee had already paid tax and interest. I find that though the K.P. Pouches (P) Ltd. case dealt with Section 11AC of the Central Excise Act, the ratio of the decision is applicable also to service tax matters since Section 78 of the Finance Act is identically worded as Section 11AC of the Central Excise Act. I find that the assessee has already paid 25% of the penalty. It is ordered that the assessee will have no further liability to penalty under Section 78 of the Act in view of the judgment in the case of K.P. Pouches (P) Ltd. by the Hon ble High Court of Delhi. The appeal is thus allowed in part.

Summary

Issues:
1. Stay application for waiver of pre-deposit and stay of recovery of penalties under Section 76 and 78 of the Finance Act, 1994.
2. Imposition of penalties under Sections 76 and 78 of the Act.
3. Interpretation of provisions regarding waiver of penalties.
4. Applicability of judgments in similar cases to the present matter.

Issue 1: The appellant filed a stay application for waiver of pre-deposit and stay of recovery of penalties under Section 76 and 78 of the Finance Act, 1994. The Tribunal decided to dispose of the appeal without further hearing.

Issue 2: The appellant, a manufacturer of electrical conductors, received GTA services during specific years but did not pay the service tax due nor reported the particulars in the monthly ST-3 returns. The original authority confirmed a demand and imposed penalties under Sections 76 and 78 of the Act. The impugned order sustained the penalties imposed under both sections.

Issue 3: The appellant sought waiver of the penalty under Section 76 and requested that the liability under Section 78 be restricted to 25% of the tax demanded. The appellant relied on various judgments, including the case of K.P. Pouches (P) Ltd. vs. UOI, to support the argument for waiver of penalties.

Issue 4: The Tribunal considered the arguments presented by both parties and examined the facts of the case. The Commissioner(Appeals) found the appellant guilty of suppression of facts with intent to evade payment of duty, justifying penalties under Sections 76 and 78. The Tribunal upheld the penalty under Section 76, as there was no sufficient cause to extend the benefit of Section 80.

The Tribunal referenced the judgment in the case of Krishna Poduval, where it was held that penalties under both Sections 76 and 78 could be imposed for distinct and separate offenses, even if arising from the same transaction. The Tribunal also noted that the appellant had paid 25% of the penalty under Section 78, in line with the judgment in the case of K.P. Pouches (P) Ltd., leading to a partial allowance of the appeal.

In conclusion, the Tribunal upheld the penalty under Section 76 but waived the penalty under Section 78 based on the appellant's payment of 25% of the penalty amount. The judgment highlighted the importance of compliance with statutory formalities and the consequences of non-payment of service tax.