2011 (7) TMI 770 - AT - Service Tax

Demand - High Court Kerala in the case of Assistant Commissioner of Central Excise v. Krishna Poduval (2005 -TMI - 75949 - Kerala High Court) wherein it was HELD THAT the incidents of imposition of penalty are distinct and separate and even if the offences are committed in the course of same transaction or arises out of the same act the penalty is imposable for ingredients of both the offences - As argued by the appellant the duty interest and 25% of the penalty were paid by them on their own - Decided in favor of the assessee

Summary

Issues:
1. Imposition of service tax, interest, and penalties on the appellant.
2. Challenge to penalties under Section 76 and Section 78.
3. Interpretation of penalties under Sections 76 and 78 based on relevant case law.
4. Applicability of reduced penalty under proviso to Section 78.

Analysis:
1. The case involved the imposition of service tax and interest on the appellant, an authorized distributor of a telecom company, for failing to discharge their obligation of paying service tax. A show cause notice was issued demanding the service tax amount along with interest and penalties under various sections of the Finance Act, 1944. The adjudicating authority confirmed the demand, interest, and penalties, which were further upheld by the Commissioner (Appeals).

2. The appellant challenged the penalties imposed under Section 76 and Section 78. They argued that equivalent penalty under Section 78 was not warranted, citing a Supreme Court judgment emphasizing that penalties should not be imposed merely because it is lawful to do so. Additionally, the appellant contested the imposition of penalty under Section 76, claiming that being penalized under different sections for the same offense was unjust.

3. The Tribunal referred to a judgment of the Hon'ble High Court of Kerala in a relevant case to interpret the penalties under Sections 76 and 78. The court held that penalties under these sections could be imposed separately even if arising from the same transaction or act, as the offenses and penalties were distinct and separate. The court also highlighted that penalties could be imposed for the ingredients of both offenses, especially if the person liable to pay service tax failed to do so, irrespective of suppressing the value of taxable service.

4. The Tribunal found no infirmity in imposing separate penalties under Sections 76 and 78. It acknowledged that the appellant had voluntarily paid the duty, interest, and a portion of the penalty, indicating a bona fide intention. The Commissioner (Appeals) rightly considered this and granted the benefit of reduced penalty under the proviso to Section 78. Consequently, the Tribunal upheld the order of the Commissioner (Appeals) based on the facts presented in the case.

In conclusion, the Tribunal affirmed the decision of the Commissioner (Appeals) regarding the imposition of penalties under Sections 76 and 78, considering the distinct nature of the offenses and penalties, as well as the appellant's voluntary payment towards the dues.