2013 (3) TMI 21 - AT - Service Tax

Waiver of penalty u/s 80 - discretionary power - held that - original authority while exercising discretion under Section 80 has held that the assessee was a small time operator and an illiterate and that he was not familiar with the Service Tax Law. He has thus given relief from penalty under Section 76. These findings of the original authority were not challenged by the department before the Commissioner (Appeals). The Commissioner (Appeals) on appeal by the party has held that the reasons given by the original authority for giving relief under Section 76 would equally apply for grant of relief under Section 78. The decisions relied upon by the department are distinguishable on facts from the present case. - order of Commissioner (Appeals) granting full waiver sustained - Decided against revenue.

Summary

Issues:
Department's appeal against Commissioner (Appeals) order dated 14.12.2009 regarding liability to service tax, interest, and penalty under Sections 76 and 78 for services rendered by an unregistered outdoor caterer from 10/09/2004 to 21/07/2006.

Analysis:

1. Liability to Service Tax and Penalty under Section 78:
The original authority confirmed service tax of Rs. 1,94,100/- along with interest and imposed penalty under Section 78 on the unregistered service provider. However, the original authority, considering the service provider as a small-time operator and illiterate, granted immunity from penalty under Section 76 by invoking Section 80 of the Finance Act. The Commissioner (Appeals) upheld the liability to service tax and interest but granted relief from penalty under Section 78, aligning with the original authority's decision to invoke Section 80. The department challenged this relief, arguing that since the service provider was unregistered and the original authority deemed it fit to impose a penalty, the relief was unwarranted. However, the appellate tribunal noted that the department did not challenge the original authority's findings regarding the service provider's status and awareness of tax laws. The tribunal found that the reasons for granting relief under Section 76 also applied to Section 78, distinguishing this case from the precedents cited by the department where no such benefit under Section 80 was granted. Consequently, the tribunal rejected the department's appeal, upholding the Commissioner (Appeals) order.

2. Invocation of Section 80 and Department's Challenge:
The tribunal emphasized that the original authority's decision to invoke Section 80 and grant relief under Section 76 was crucial. Since the department did not challenge this decision before the Commissioner (Appeals), the tribunal found no grounds to interfere with the relief granted under Section 78 by the Commissioner (Appeals). The tribunal highlighted the importance of challenging specific legal grounds and decisions at each stage of the appeal process to maintain consistency and uphold the principles of tax law. By giving full effect to Section 80, the Commissioner (Appeals) acted in accordance with the original authority's discretion, leading to the rejection of the department's appeal.

In conclusion, the appellate tribunal upheld the Commissioner (Appeals) order, emphasizing the significance of challenging legal grounds at the appropriate stages of the appeal process. The decision highlighted the importance of considering the specific circumstances of each case, especially when invoking provisions like Section 80 for granting relief from penalties under Section 76 and 78. The judgment underscored the need for consistency in legal arguments and adherence to procedural requirements to ensure fair and just outcomes in tax disputes.