2012 (8) TMI 314 - AT - Service Tax

Penalty under Section 76 - call for invoking Section 80 - Held that - As Adjudicating authority has already invoked Section 80 curtailing the penalty to Rs 1 Lakh considering the reason that the appellant could be under impression that they have to discharge the Service Tax liability only when they recover the same from their client - as the Service Tax liability on Security Agency services being new, the entire penalty need to be deleted - in favour of assessee.

Summary

Issues: Appeal against penalty under Section 76 of Finance Act, 1994

Analysis:
The appeal was directed against Order-in-Appeal No.13/2006, where the appellant sought to set aside the penalty imposed under Section 76. The appellant contended that they were under the impression that the Service Tax liability had to be discharged only when their clients paid the tax. The first appellate authority invoked Section 80 to reduce the penalty, considering the appellant's belief regarding the tax liability. The Tribunal observed that during the relevant period, the Service Tax liability on Security Agency services was new and disputed on various issues. Consequently, the Tribunal set aside the penalty of Rs.1 lakh imposed under Section 76, in line with the arguments presented by the appellant and the provisions of Section 80.

The Tribunal noted that the first appellate authority had already invoked Section 80 to reduce the penalty under Section 76. The Tribunal considered the appellant's submission that they believed the Service Tax liability was due only upon receiving payment from their clients. Given the newness and disputed nature of the Service Tax liability during the relevant period, the Tribunal found merit in the appellant's arguments. Consequently, the Tribunal set aside the portion of the impugned order imposing a penalty of Rs.1 lakh under Section 76 of the Finance Act, 1994.

In conclusion, the Tribunal disposed of the appeal by setting aside the penalty under Section 76, in line with the appellant's arguments and the provisions of Section 80. The Tribunal acknowledged the unique circumstances surrounding the new and disputed nature of the Service Tax liability during the relevant period, leading to a lenient view in favor of the appellant.