2014 (1) TMI 1554 - AT - Service Tax

Penalty u/s 76 & 78 - Simultaneous penalty u/s 76 & 78 - Clearing and Forwarding Agents Services - Goods Transport Agency Services - Whether penalty under Section 76 is imposable when the penalty under Section 78 has been imposed under the Finance Act - Held that - penalty was imposable under both Section 76 and 78 separately even if offence were committed in the course of same act - Following decision of Bajaj Travels Ltd. Versus Commissioner of Service-tax 2011 (8) TMI 423 - DELHI HIGH COURT - Decided in favour of Revenue.

Summary

Issues:
1. Whether penalty under Section 76 is imposable when penalty under Section 78 has been imposed under the Finance Act.

Analysis:
The appeal was filed by the Revenue against the Order-in-Appeal passed by the Commissioner (Appeal), Customs Central Excise, Chandigarh. The case involved M/s VTC Transport Co., a provider of various services including Clearing and Forwarding Agents Services. The respondents had entered into an agreement with M/s CITCO to provide services to Steel Authority of India Ltd. (SAIL) and Rashtrya Ispat Nigam Ltd. (RINL). The service provided by the respondents was found to come under taxable service of 'Business Support Services' from 01.05.2006. A Show Cause Notice was issued to the respondents demanding service tax, interest, and penalties. The original authority confirmed the demand, interest, and imposed penalties under Sections 76 and 78 of the Finance Act. The respondents appealed, and the Commissioner (Appeal) dropped the penalty under Section 76 as the respondents had paid the total amount of service tax, interest, and a portion of the penalty within 30 days of receiving the order.

The Revenue challenged the impugned order on the ground that penalties under Sections 76 and 78 were separately imposable during the period involved in the appeal (2002-2003 to 2006-2007). The Revenue contended that dropping the penalty under Section 76 by the Commissioner (Appeal) was not legally proper, and the order needed to be set aside. After hearing the arguments, the Tribunal found that the only issue involved in the appeal was whether penalty under Section 76 is imposable when penalty under Section 78 has been imposed under the Finance Act. Referring to a decision by the Hon'ble High Court of Delhi in the case of Bajaj Travels Ltd., the Tribunal held that penalty under both Section 76 and 78 could be imposed separately, even if the offenses were committed in the course of the same act. Therefore, the Tribunal set aside the part of the order dropping the penalty under Section 76 and allowed the Revenue's appeal.