2011 (7) TMI 325 - AT - Central Excise

Penalty - whether penalty was imposable under Section 76 & 78 - respondent failed to pay service tax in respect of amounts received by them for providing services as direct selling agents of various banks - In view of the Board s circular No.87/5/2006-ST dated 06.11.06 as well as the provisions of Section 73 of the Act this was a case where no action was warranted - find that the decisions of the Tribunal in the case Vinayak Auto Lines 2010 -TMI - 78515 - CESTAT AHMEDABAD are applicable to the facts of this case - The actions of the respondent would clearly show that they had no intention to evade duty and they promptly paid the service tax with interest - Therefore this is a fit case for invoking Section 80 of Finance Act 1994 and waive penalties imposed under Section 77 & 78 also leave alone setting aside the order of the learned Commissioner (Appeals) waiving penalty Section 76 of the Act - Since I have taken a view that penalty under any of the sections namely 76 77 & 78 of the Act are not imposable the question of considering whether penalty was imposable under Section 76 & 78 of Act does not arise.

Summary

Issues:
1. Imposition of penalties under Section 76 & 78 of the Finance Act, 1994.
2. Applicability of exemption notification prior to 10.09.04.
3. Invocation of Section 80 of Finance Act, 1994 for waiver of penalties.

Imposition of Penalties under Section 76 & 78:
The respondent, an authorized service station, was accused of not paying service tax for acting as direct selling agents of various banks. Initially, the adjudicating authority imposed penalties under Section 76, 77, and 78 of the Finance Act, 1994. However, on appeal, the Commissioner (Appeals) reduced the service tax liability and set aside the penalty under Section 76, stating that penalties under Section 76 & 78 cannot be imposed simultaneously. The Revenue appealed this decision, arguing that penalties under both sections could be imposed before 10.05.08. The Tribunal noted that there were conflicting views on this issue and referred to a Kerala High Court decision. Ultimately, the Tribunal rejected the Revenue's appeal, holding that penalties under Section 76 & 78 were not imposable in this case.

Applicability of Exemption Notification:
The Commissioner (Appeals) reduced the service tax liability for the respondent, citing an exemption notification that exempted the respondent from paying service tax before 10.09.04. This decision was challenged by the Revenue in their appeal. The Tribunal upheld the Commissioner's decision regarding the exemption notification, stating that the respondent was not liable to pay service tax before the specified date as per the notification.

Invocation of Section 80 for Waiver of Penalties:
The respondent invoked Section 80 of the Finance Act, 1994, seeking a waiver of penalties. They argued that they promptly paid the service tax upon being informed and that there was confusion regarding the tax liability before a clarification was issued by the Board in 2006. The Tribunal considered the respondent's submissions, along with past decisions and the Board's circular clarifying the tax liability of service stations. The Tribunal found that the respondent had no intent to evade duty and promptly paid the tax with interest. Therefore, the Tribunal invoked Section 80 to waive the penalties imposed under Section 77 & 78, setting aside the penalties and rejecting the Revenue's appeal.

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