2011 (4) TMI 1061 - AT - Service Tax

Power of revision - Penalty under Sections 75A 76 77 and 78 of the Finance Act 1994 Held that - penalty imposable under Section 75A no more remains in the statute book from 10-9-05 but at the relevant point of time when the law was in force to regulate taxable activities through the process of registration such a mandatory requirement cannot be dispensed with levy of penalty under Section 75A to the extent levied Penalty under Section 76 & 78 - Record no where indicates any element of Section 78 of Finance Act 1994 to show that the appellant had made deliberate attempt to escape its liability under law authority himself has recorded that service tax registration was allotted to the appellant by which the assessee came to record for exercise of jurisdiction over them. The revisionary power is exercisable only if the act of the authorities below is prejudicial to the interest of Revenue levy of penalty under Sections 76 and 78 of Finance Act 1994 which are severe in nature levy thereof on small tax payers is unwarranted without bringing mens-rea to record Penalty under Section 77 - there was failure to file the return. Failure to file the return has certainly caused prejudice to the interest of Revenue depriving the Revenue from the scope of scrutiny of the affairs of the appellants. However the appellants after getting revised figures came forward to pay the taxes and revised returns were filed. The orders do not indicate the length of failure on the part of the appellants to impute their mala fide in filing their revised returns - order has not demonstrated the reasoning for imposition of penalty under Section 77 of the Finance Act 1994 it suffers from legal infirmity no penalty under Section 77 and that is set aside appeals are partly allowed to the extent indicated above

Summary

Issues:
Appeal against Revisional Order under Finance Act, 1994 imposing penalties under Sections 75A, 76, 77, and 78.

Analysis:
1. Penalty under Section 75A:
The Revisional Order imposed penalties under various sections of the Finance Act, including Section 75A. The appellants argued that the penalties were unjustified. However, the Tribunal noted that Section 75A was no longer applicable after a certain date. Despite this, penalties were levied as the requirement for registration was mandatory at the relevant time. The Tribunal agreed with the Revisionary authority on the imposition of penalties under Section 75A in all cases.

2. Penalty under Sections 76 & 78:
Regarding penalties under Sections 76 and 78, the Tribunal considered the plea of reasonable cause. Upon examination of the records, it was found that there was no deliberate attempt by the appellants to evade liability under the law. The Tribunal emphasized that the levy of severe penalties on small taxpayers without establishing mens rea was unwarranted. It was concluded that penalties under Sections 76 and 78 required consideration under Section 80 of the Finance Act, 1994. The Tribunal did not find any mala fide intention on the part of the appellants and decided to set aside the penalties imposed under these sections.

3. Penalty under Section 77:
In the case of penalties under Section 77 for failure to file returns, the Tribunal acknowledged that such failure could prejudice the Revenue. However, it was noted that the appellants rectified their returns after realizing the errors. The Tribunal found that the order did not provide sufficient reasoning for imposing penalties under Section 77. Consequently, the penalty under Section 77 was set aside.

4. Overall Decision:
In conclusion, the Tribunal partially allowed the appeals by setting aside penalties under Sections 76, 77, and 78 based on the specific circumstances of each case. It was emphasized that this order should not be considered a precedent due to its unique factual context.

This detailed analysis of the judgment highlights the Tribunal's considerations regarding the imposition of penalties under different sections of the Finance Act, 1994, and the reasons behind setting aside or upholding these penalties based on the specific circumstances of each case.