2011 (2) TMI 845 - AT - Service Tax

Waiver of pre-deposit - The applicant had paid Service Tax along with interest and the adjudicating authority, by invoking the provisions of Section 80, dropped the proposal for imposing penalties under Sections 76, 77 and 78 of the Finance Act - The contention of the applicant is that the Commissioner of Service Tax is not justified in reviewing the order passed by the adjudicating authority, as the adjudicating authority has exercised discretion conferred under Section 80 of the Finance Act and relied upon the decision of the Hon ble Karnataka High Court in the case of CCE, Bangalore-III Vs. Sunitha Shetty (2004 -TMI - 170 - HIGH COURT (KARNATAKA) BANGLORE) - The decision of the Hon ble Karnataka High Court, prima facie, we find that the applicant has a strong case - Decided in favour of assessee.

Summary

Issues:
1. Application for waiver of pre-deposit of penalties imposed by the Commissioner under the Review proceedings under Section 84 of the Finance Act, 1994.
2. Justification of the Commissioner in reviewing the order passed by the adjudicating authority.
3. Confirmation of demand of Service Tax based on suppression of facts and acceptance of the adjudication order.

Analysis:
1. The applicant filed an application seeking waiver of pre-deposit of penalties imposed by the Commissioner under Section 84 of the Finance Act, 1994. The applicant had paid Service Tax along with interest, and the adjudicating authority dropped the proposal for imposing penalties under Sections 76, 77, and 78 of the Finance Act by invoking the provisions of Section 80. The applicant argued that the Commissioner was not justified in reviewing the order passed by the adjudicating authority, citing the discretion exercised under Section 80 and referring to a decision of the Hon'ble Karnataka High Court in a similar case.

2. The Revenue contended that the demand of Service Tax was confirmed based on the larger period due to suppression of facts. They argued that since the applicants accepted the adjudication order invoking the extended period of limitation on the grounds of suppression, the impugned order was rightfully passed. However, the Tribunal noted that the Hon'ble Karnataka High Court had previously upheld a similar decision where it was held that the Commissioner was not justified in reviewing the order passed by the adjudicating authority when exercising discretion under Section 80 of the Finance Act. Based on this precedent, the Tribunal found that the applicant had a strong case. Consequently, the pre-deposit of penalties was waived, and the recovery of the same was stayed during the pendency of the appeal. The stay petition was allowed by the Tribunal.

3. In conclusion, the Tribunal ruled in favor of the applicant, granting the waiver of pre-deposit of penalties and staying the recovery during the appeal process. The decision was influenced by the precedent set by the Hon'ble Karnataka High Court, which supported the argument that the Commissioner should not review orders passed by the adjudicating authority when the latter has exercised discretion under Section 80 of the Finance Act. The judgment provided relief to the applicant based on the legal principles and interpretations applied in similar cases.