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2011 (5) TMI 619 - HC - Service TaxBenefit of reduced penalty u/s 78 of the Finance Act, 1994 - whether Tribunal committed error in granting the option to deposit service tax, interest and penalty @ 25% of service tax amount towards penalty - Held that - Relying on Commissioner of Customs & Excise, Ahmedabad-I v. Akash Fashion Prints Private Limited 2009 (1) TMI 113 - GUJARAT HIGH COURT no error in the order passed by the Tribunal occurs as provision under which the penalty was levied by the original adjudicating officer permits benefit of reduction in the penalty, subject to party paying the entire amount of tax determined interest and 25% of the penalty within 30 days of the communication of the order. The provision appears to be pari materia to Section 11AC there is no infirmity in view adopted by the Tribunal - in favour of assessee.
Issues:
1. Whether the Tribunal erred in confirming the order of the Commissioner (Appeals) regarding the reduced penalty option? 2. Whether the Tribunal erred in applying previous decisions without proper comparative analysis? 3. Whether the impugned order of the Tribunal was passed in accordance with the law? Issue 1: The Assessee-respondent, engaged in providing Consultation services, was found to have evaded payment of Service Tax, leading to a show cause notice demanding tax payment, interest, and penalty under section 78 of the Finance Act, 1994. The original adjudicating authority upheld the demand, which was challenged by the respondent before the Commissioner (Appeals). The Commissioner reduced the service tax and interest amount but re-determined the penalty under section 78, offering an option to pay a reduced penalty of 25% of the duty confirmed within 30 days of receipt of the order. Issue 2: The Department contested the Commissioner's decision before the Customs Excise & Service Tax Appellate Tribunal (CESTAT). The CESTAT, after detailed deliberation, rejected the appeal of the Revenue on 29.6.2010. The Department raised substantial questions of law regarding the Tribunal's decision, arguing that it erred in applying precedents without a comparative analysis of the cases cited, including M/s. Swati Chemical Industries and M/s. Akash Fashion Prints Pvt. Ltd. The Tribunal's decision was challenged based on the lack of proper examination of comparative facts between the cited cases and the respondent's case. Issue 3: In the High Court's examination of the matter, it was observed that the Tribunal had correctly followed its previous judgment in the case of CCE Vadodara V/s. Swati Chemical Industries and the findings of the High Court in the case of Commissioner of Customs & Excise, Ahmedabad-I v. Akash Fashion Prints Private Limited. The High Court noted that the penalty provision under section 78 of the Finance Act, 1994 allows for a reduction in penalty if the party pays the entire tax amount, interest, and 25% of the penalty within 30 days of the order communication. The High Court found no error in the Tribunal's decision, as it aligned with the provisions of the law and previous judgments, dismissing the appeal and affirming the Tribunal's order. In conclusion, the High Court upheld the Tribunal's decision, emphasizing that the Tribunal had correctly applied the law and relevant precedents in determining the penalty reduction option for the respondent. The Court found no error in the Tribunal's approach, dismissing the appeal and affirming the order.
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