2011 (7) TMI 610 - AT - Service Tax

Waiver of penalties u/s 78 of the Finance Act 1994 - Held that - Demand has been set aside by Tribunal by the decision cited wherein the respondent s undertake not to take refund of the amount deposited by them and the Tribunal has held that the whole demand is admitted by respondents therefore the penalty u/s 78 is not leviable on the respondents following the decision of respondents own case against the impugned order. Appeal of Revenue dismissed.

Summary

Issues: Appeal against dropping penalties under Section 78 of the Finance Act, 1994.

Analysis:
1. The Revenue appealed against the impugned order dropping penalties under Section 78 of the Finance Act, 1994, based on the respondent admitting their service tax liability. The Department argued that since the respondent admitted liability, the penalty should be imposed, citing the decision in CCE Vs Krishna Poduval (2006). However, the respondent's counsel contended that a previous appeal before the Tribunal had already dropped the show cause notice on the grounds of limitation, as per the decision reported in 2009. The counsel further mentioned that the Revenue's appeal was not sustainable in light of the Tribunal's decision and that the matter had been taken to the Hon'ble Apex Court, where the appeal was admitted.

2. After hearing both sides, the Tribunal considered the previous decision where the demand was set aside, and the respondents agreed not to seek a refund of the deposited amount. The Tribunal concluded that since the whole demand was admitted by the respondents, the penalty under Section 78 was not applicable, following the decision in the respondent's own case. Consequently, the Tribunal dismissed the Revenue's appeal and disposed of the cross objection accordingly.