2011 (8) TMI 402 - AT - Service Tax

Penalty under Section 76 - service tax payments belatedly - In the case of Port Officer, Hon ble High Court had decided that penalty cannot be reduced below the minimum prescribed under Section 76 of Finance Act, 1994 - The original adjudicating authority had imposed the minimum penalty prescribed under Section 76 of Finance Act, 1994 - Since there was no appeal against reduced penalty by the respondent during the relevant time and only Revenue was in appeal against reduction of penalty - it have already taken a view that the memorandum of cross objection filed cannot be considered as it was belatedly filed, the appeal filed by the Revenue has to be allowed - Accordingly, appeal is allowed and cross objection filed by respondent is rejected.

Summary

Issues:
1. Reduction of penalty under Section 76 of Finance Act, 1994 by Commissioner (Appeals).
2. Validity of cross objection filed by the respondent.
3. Interpretation of penalty provisions under Section 76 based on the decision of Hon'ble High Court of Gujarat in the case of CCE Vs. Port Officer.

Analysis:
1. The case involved a firm registered as a service provider of construction service, M/s. V.M. Engineering Works, which had made belated service tax payments for two quarters from April 2007 to December 2007. The firm was penalized Rs.22,200 under Section 76 of the Finance Act, 1994. Upon appeal, the penalty was reduced to Rs.8000 by the Commissioner (Appeals). However, the Revenue appealed against this decision, which was initially rejected. Subsequently, a higher court directed the Tribunal to reconsider the issue in light of a specific case law. The learned DR argued that as per the decision of the Hon'ble High Court of Gujarat in the case of Port Officer, the penalty under Section 76 cannot be reduced below the prescribed amount, which in this case was Rs.22,200.

2. During the hearing, it was noted that no one appeared on behalf of the respondents, although they had filed a cross objection. The Tribunal highlighted that the cross objection was filed after the prescribed time limit of 45 days from the receipt of the notice of appeal. As per Section 86(4) of the Finance Act, 1994, a memorandum of cross objection must be filed within the specified timeframe. In this instance, the cross objection was submitted at a later stage, during the de-novo consideration of the issue following the directions of the Hon'ble High Court. Consequently, the Tribunal deemed the cross objection as not within the legally mandated time limit and therefore not valid.

3. The Tribunal referenced the decision of the Hon'ble High Court in the case of Port Officer, emphasizing that the penalty under Section 76 cannot be reduced below the minimum prescribed amount. As the original adjudicating authority had already imposed the minimum penalty, and there was no appeal against the reduced penalty by the respondent within the stipulated time frame, the Tribunal concluded that the appeal filed by the Revenue should be allowed. Consequently, the Tribunal rejected the cross objection filed by the respondent, as it was considered belated and not meeting the requirements of the Finance Act, 1994.

This detailed analysis of the judgment highlights the key issues related to the reduction of penalty, validity of the cross objection, and the interpretation of penalty provisions under Section 76 based on relevant legal precedents and statutory provisions.