2011 (5) TMI 805 - AT - Service Tax

Penalty - Appellants argues that w.e.f. 2008, penalties is under Section 76 and Section 78 have been made mutually exclusive and therefore, the penalty under Section 76 should be set aside - Departmental Representative states that during the impugned period it was permissible to impose penalties under both the Sections 76 and 78. He further states that the amendment made in the year 2008 is only prospective and has no application for the previous period Held that - In view of the fact that the Appellants have already paid the Service Tax amount along with interest and the penalty under Section 78 of the Finance Act, 1994, penalty imposed under Section 76 set aside and Appeal allowed

Summary

Issues: Challenge on second penalty imposed under Section 76 of the Finance Act, 1994.

In this judgment by the Appellate Tribunal CESTAT, Kolkata, the issue at hand was the challenge on the second penalty imposed under Section 76 of the Finance Act, 1994. The appellant had paid the Service Tax, interest, and penalty under Section 78, with the appeal limited to contesting the penalty under Section 76. The appellant argued that penalties under Sections 76 and 78 had become mutually exclusive from 2008 onwards, hence the penalty under Section 76 should be set aside. On the other hand, the Departmental Representative contended that during the relevant period, penalties under both Sections 76 and 78 could be imposed, and the 2008 amendment was prospective, not applicable to the previous period.

The presiding judge, Dr. Chittaranjan Satapathy, considered the arguments from both sides and noted the Tribunal's past practice of confirming penalties under one of the two Sections, especially in light of subsequent legislative changes. Dr. Satapathy opined that imposing a penalty under one of the Sections would suffice as a deterrent for the appellants. Given that the appellants had already settled the Service Tax, interest, and penalty under Section 78, Dr. Satapathy decided to set aside the penalty imposed under Section 76, thereby allowing the appeal. This decision was pronounced and dictated in the open court.