2007 (9) TMI 42 - AT - Service Tax

Appellant had deposited short payment of service tax after noticing by the officers but before the issue of SCN Adjudication authority has accepted in his order that appellant was not having mala fide intention to evade tax. Stay granted

Summary

Issues:
Waiver of pre-deposit of penalty in Service Tax matters.

Analysis:
The appellants, engaged in servicing motor vehicles as an "Authorized Service Station," had discharged the Service Tax and interest but sought waiver of pre-deposit of penalties imposed in each case. They contended that the case on merits favored them as they had voluntarily paid the short-levy identified during a visit by officers. The Assistant Commissioner had not proceeded to levy penalties under Sections 76 and 77 but imposed a penalty under Section 78, which the appellants discharged. However, the Commissioner in the Review Order enhanced the penalties under Sections 76 and 77, along with Section 78. The appellants argued that the demands were time-barred, and there was no suppression of facts or intention to evade duty, supported by various grounds and citations.

The learned Counsel for the appellants emphasized that there was no suppression or evasion warranting penalty imposition, as noted by the Assistant Commissioner who found no mala fide intent or act necessitating penalties. The JDR highlighted the need for further consideration regarding non-levy of penalties when duty is paid before a show cause notice. The Assistant Commissioner's decision to not impose penalties under Sections 76 and 77, but under Section 78, was based on the absence of mala fide intent to evade tax, considering the timely payments made by the appellants. The Counsel cited precedents to support the argument that penalties should not apply to minor breaches, requiring intent to evade duty, suppression of facts, or mala fide actions. The Assistant Commissioner's discretion to impose a lesser penalty under Section 80 was deemed appropriate, leading to the grant of waiver of pre-deposit of penalties imposed and enhanced in the impugned orders.

In conclusion, the Tribunal found the Assistant Commissioner's decision to drop penalties under Sections 76 and 77 and impose a lesser penalty under Section 78, in line with the powers under Section 80, just and proper. Therefore, the waiver of pre-deposit of penalties was granted, and no penalty recovery was allowed until the disposal of the appeals. The appeals were to be linked with related matters scheduled for a hearing on 5th October 2007.