2011 (9) TMI 523 - AT - Service Tax

Waiver of penalty u/s 76, 77 & 78 of the Finance Act, 1994 Held that - Since the appellant came forward for registration and filed returns though for the impugned period there is a negative finding against it. However, on prayer of appellant it would be desirable to grant fair opportunity of hearing to him when mitigating factor such as early stage of implementation of law, appellant s ignorance about law, and grant of similar benefit to other small cable operators are said to be present. Thereby, penalty aspect is remanded to original authority.

Summary

Issues: Applicability of penalty under Sections 76, 77, and 78 of the Finance Act, 1994 on a small cable operator for alleged suppression or evasion of service tax; Consideration of waiver of penalty in similar cases; Discrimination in treatment compared to relief granted to other operators; Granting fair opportunity of hearing under Section 80 of the Finance Act, 1994.

The judgment addresses the issue of whether a small cable operator should be penalized under Sections 76, 77, and 78 of the Finance Act, 1994 for alleged suppression or evasion of service tax. The appellant argued that there was no suppression or evasion, as they believed the service tax was paid by the Multi-System Operator (MSO) providing services to them. The appellant also highlighted that they obtained registration and filed returns once they understood the legal requirements. The appellant requested leniency due to reasonable cause and cooperation with the department. The appellant's counsel emphasized that other small cable operators had been granted relief, and there should be no discrimination in treatment. The judge acknowledged the appellant's arguments and directed a fresh adjudication on the penalty issue, considering mitigating factors and the appellant's plea for fair consideration under Section 80 of the Finance Act, 1994.

Regarding the contention of discrimination in treatment compared to other operators who were granted relief, the judge noted the appellant's concerns and directed the adjudicating authority to assess the existence of reasonable cause and provide a reasoned order on the penalty imposed under all three sections of the Finance Act, 1994. The judge emphasized the importance of granting a fair opportunity of hearing to the appellant, especially considering the mitigating factors presented by the appellant's counsel. The judge instructed the adjudicating authority to reexamine the penalty issue and provide a detailed and comprehensive decision by the end of December 2011.

In conclusion, the judgment confirmed the service tax demand but remanded the penalty aspect to the original authority for a fresh adjudication. The judge emphasized the need for a thorough assessment of the mitigating factors presented by the appellant and directed the adjudicating authority to provide a reasoned and speaking order on the penalty issue, taking into account the appellant's arguments and the principles of fairness and justice.