2011 (7) TMI 551 - AT - Service Tax

Penalty equal to service tax amount paid late u/s 76 and penalty u/s 77 imposed - whether applicability of provisions of Section 80 arises? - Held that - while discussing provisions of Section 76 of Finance Act, 1994, the Commissioner has taken a view that penalty under Section 76 is mandatory and the adjudicating authority has no option but to impose penalty - Therefore both the lower authorities have not considered the applicability of provisions of Section 80 of Finance Act, 1994 before coming to the conclusion that penalty equal to the service tax short paid has to be imposed - The matter is required to be remanded for fresh consideration of the issues in the light of facts and circumstances and the provisions of statute and also judicial precedents - matter remanded to the original adjudicating authority for fresh decision

Issues:
1. Imposition of penalty under Sections 76 and 77 of the Finance Act, 1994 for late payment of service tax.
2. Failure of lower authorities to consider timely payments made by the appellant before the issue of show cause notice.
3. Applicability of provisions of Section 80 of the Finance Act, 1994 in relation to penalty under Section 76.

Analysis:

Issue 1: Imposition of Penalty under Sections 76 and 77
The appellant made delayed payments of service tax for the periods ending December 2008 and March 2009. Proceedings were initiated resulting in the imposition of penalties under Section 76 for late payment and a separate penalty of Rs. 5000 under Section 77. The lower authorities failed to consider the timely payments made by the appellant before the show cause notice was issued. The original adjudicating authority assumed non-payment of service tax, leading to a penalty. However, the Commissioner (Appeals) acknowledged the voluntary payment by the appellant and opined that penalty under Section 76 was not justified. The discussion revolved around the mandatory imposition of penalty under Section 76 and the absence of consideration for the applicability of Section 80 by the lower authorities.

Issue 2: Failure to Consider Timely Payments
The lower authorities overlooked the fact that the appellant had made payments before the show cause notice was issued, which was crucial in determining liability for penalties. The appellant's claim regarding pre-show cause notice payments was dismissed without due consideration. The omission of the timely payment aspect led to a lack of analysis on whether penalties were warranted for the amounts paid before the notice was served, and if Section 73(3) of the Finance Act, 1994 could be applied.

Issue 3: Applicability of Section 80
The discussion highlighted the failure of both lower authorities to address the applicability of Section 80 of the Finance Act, 1994 concerning the imposition of penalties. While the Commissioner (Appeals) briefly touched on Section 80 in a different context, the primary focus was on the mandatory nature of penalties under Section 76. The absence of a thorough examination of Section 80 before concluding on penalty imposition raised concerns about the completeness of the decision-making process.

In conclusion, the appellate tribunal set aside the impugned order and remanded the matter to the original adjudicating authority for a fresh decision. The directive aimed to ensure a comprehensive review of the issues, considering the facts, statutory provisions, and relevant judicial precedents. The appellant was granted an opportunity to present their case in light of the remand for a more thorough and well-founded determination.

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