2011 (9) TMI 690 - HC - Service Tax

Penalty - the Commissioner has imposed a penalty of Rs. 7,00,000/- under Sec. 78 and penalty of Rs. 200/- per day under Sec. 76 of the Finance Act, in pursuance of the power of suo motu revision - Held that once the original authority being satisfied about the cause shown, exercised its power under Sec. 80 of the Act and did not impose penalty, the Commissioner has no jurisdiction to interfere with such discretionary orders and impose penalty in pursuance of his revisional jurisdiction - Appeal is dismissed

Summary

Issues:
Challenge to imposition of penalty in a suo-motu proceeding by the Commissioner.

Analysis:
The Revenue appealed against the Tribunal's order setting aside the penalty imposed by the Commissioner in a suo-motu proceeding. The Asst. Commissioner had initially held that no penalty was leviable as service tax had been paid under the Amnesty Scheme. However, the Commissioner imposed a penalty under Sec. 78 and Sec. 76 of the Finance Act through suo motu revision. The Tribunal, citing precedents, held that the Commissioner was not justified in interfering with the original authority's discretionary order when no penalty was imposed after being satisfied with the cause shown. The Tribunal's decision was based on judgments in previous cases, including C.C.E. v. Sunitha Shetty and M/s. Majestic Mobikes (P) Ltd. v. C.C.E.

The Tribunal's decision in the case of M/s. Majestic Mobikes (P) Ltd. was upheld by the High Court. Following the judgments in C.C.E. v. Sunitha Shetty and Majestic Mobikes (P) Ltd., it was established that if the original authority, after being satisfied with the cause shown, did not impose a penalty under Sec. 80 of the Act, the Commissioner had no jurisdiction to interfere with such discretionary orders and impose a penalty through revisional jurisdiction. Therefore, the Tribunal was deemed justified in setting aside the Commissioner's imposition of penalty in this case.

In conclusion, the High Court found no merit in the Revenue's appeal and dismissed it. The judgment highlighted the importance of respecting the discretionary powers of the original authority when it comes to the imposition of penalties under the relevant provisions of the Finance Act.