2011 (7) TMI 479 - AT - Service Tax

Penalty - penalty cases of section 76 are covered by the overriding provision of section 80 of the Act. Burden to prove that there exists reasonable cause for invoking provision of section 80 of the Act - whether there exists reasonable cause to exonerate the appellant from levy of penalty, matter is remanded to the original authority and on all other aspects, adjudication is confirmed.

Summary

Issues involved:
1. Levy of penalty under Section 76 of the Finance Act, 1994 without invoking Section 78.
2. Applicability of Section 80 of the Finance Act, 1994 in penalty cases.
3. Payment of service tax and confirmation of adjudication.

Levy of penalty under Section 76 without invoking Section 78:
The counsel for the Appellant argued that since Section 78 of the Finance Act, 1994 was not invoked, the penalty under Section 76 was unwarranted based on a finding in the adjudication order. The Appellant was permitted to contest the penalty under Section 76 only. The Tribunal acknowledged this argument and confined the appeal to the dispute regarding the penalty under Section 76.

Applicability of Section 80 in penalty cases:
The Appellant's counsel pointed out that Section 76 of the Act is subject to Section 80 of the Finance Act, 1994. It was noted that the plea regarding the applicability of Section 80 was not considered by the Adjudicating Authority, leading to the Appellant's suffering. The Tribunal agreed that a legal issue arose in this case, emphasizing that the matter required thorough examination since the Appellant had raised the applicability of Section 80 in their defense. The Tribunal remanded the matter to allow the Adjudicating Authority to consider the case under Section 80 and determine if there was a reasonable cause to exempt the Appellant from the penalty under Section 76.

Payment of service tax and confirmation of adjudication:
The Departmental Representative argued for confirming the entire adjudication due to the non-payment of service tax. After hearing both sides and examining the records, the Tribunal found merit in the Appellant's submission regarding the applicability of Section 80. The Tribunal highlighted that Section 80 overrides penalty cases under Section 76 and emphasized the burden on the Appellant to prove the existence of a reasonable cause under Section 80. Consequently, the Tribunal remanded the matter to the original authority for further consideration under Section 80 while confirming the adjudication on other aspects.

In conclusion, the Tribunal remanded the case to the original authority for consideration under Section 80 of the Finance Act, 1994, regarding the penalty under Section 76. The Tribunal confirmed the adjudication on all other aspects, emphasizing the need for a fair opportunity for the Appellant to present their case and for the authority to decide on the issue of penalty accordingly.