2013 (11) TMI 1360 - HC - Service Tax

Quantum of penalty - Penalty u/s 76, 77, 78 - Tribunal reduced penalty - Held that - Appellate Authority has not applied its mind with reference to the findings and reason recorded in imposing the penalty in exercise of the power under Section 76 of the Finance Act - without assigning any reason for setting aside the findings recorded by the fact finding authority, the second Appellate Tribunal simply placed reliance upon the decision of the assessee s own case 2005 (183) E.L.T. 51 (T - Bang.) , which decisions have no application to the fact situation of this case, particularly having regard to the finding recorded by the original authority - Following decision of assessee s own in 2007 (7) TMI 72 - HIGH COURT , BANGALORE - Decided in favour of Revenue.

Summary

Issues:
Reduction of penalty under Sections 76 and 77 of the Finance Act, 1994 by the Tribunal based on employee strike causing delayed payment of service tax. Dispute over the reduction of penalty and failure to follow previous court orders.

Analysis:
The High Court of Karnataka heard an appeal against the Customs, Excise and Service Tax Appellate Tribunal's order reducing a penalty imposed under Sections 76 and 77 of the Finance Act, 1994. The Tribunal had reduced the penalty from Rs. 5,20,000 to Rs. 1,00,000 due to an all India strike causing delayed payment of service tax. The Tribunal's decision was based on previous judgments and the strike affecting the company's operations. The High Court noted that the Tribunal relied on a previous order involving the same respondent for the penalty reduction.

The appellant referred to a previous court order dated 25.07.2007 that set aside the Tribunal's decision in a similar case involving the same respondent. The High Court examined the previous court order, which highlighted the mandatory nature of penalty imposition under Section 173Q of the Act, with discretionary quantum. The court found that the Tribunal erred in reducing the penalty without proper reasoning and disregarding previous court decisions. The High Court addressed specific legal questions regarding the penalty amount and the applicability of previous court judgments.

In conclusion, the High Court allowed the appeal and answered both legal questions in favor of the appellant and against the respondent. The judgment emphasized the importance of following legal precedents and ensuring the proper application of penalty provisions under the Finance Act, 1994. The court's decision was based on a thorough analysis of the Tribunal's reduction of the penalty and its compliance with relevant legal principles and court orders.