2007 (5) TMI 146 - AT - Service Tax

Revenue contended that appellant is liable for penalty u/s 76 but commissioner (Appeal) has waived the penalty without invoking the provisions of Section 80. Matter remanded to Commissioner(A) to decide afresh

Summary

Issues:
Challenge to order of Commissioner (Appeals) regarding applicability of penal provisions of Section 76 of the Finance Act without ascertainment of liability under Section 68 of the Act. Interpretation of Sections 76, 77, 78, and 79 of the Act in light of the applicability of Section 80 of the Act.

Analysis:

1. The appeal before the Appellate Tribunal CESTAT, New Delhi involved a challenge by the Revenue against the order of the Commissioner (Appeals) dated 25-8-2005. The Commissioner had opined that penal provisions of Section 76 of the Finance Act would apply when liability to Service Tax was ascertained under Section 68 of the Act, but in this case, there was no such ascertainment. Consequently, the Commissioner found the penalty imposed under Section 76 unjustified.

2. The Revenue, aggrieved by the Commissioner's decision, argued before the Tribunal. The Revenue relied on a judgment of the Hon'ble Kerala High Court which clarified the distinction between penalties under Sections 76 and 78 of the Act. The High Court emphasized that penalties for failure to pay service tax and for suppression of taxable service value are separate offenses, each with distinct elements. The High Court also noted that penalties under both sections could be imposed on an assessee if warranted, and the authority could consider reasonable cause for the failure.

3. Upon reviewing the Commissioner's order, the Tribunal observed that the respondent had contended that Section 80 of the Act could cover the appellant's case, providing relief from penalties under Sections 76, 77, 78, and 79 if reasonable cause for the failure was proven. However, the Commissioner's order did not address the applicability of Section 80. To ensure justice, the Tribunal remanded the matter back to the Commissioner for reconsideration in light of Section 80, instructing him to specifically address this provision and consider the respondent's arguments. The Tribunal directed the Commissioner to review relevant judgments, including the Kerala High Court's ruling, before issuing a fresh decision.

4. Ultimately, the Tribunal allowed the Revenue's appeal by remanding the case to the Commissioner for a fresh decision on the imposition of penalties under Section 76, considering the applicability of Section 80 of the Act and the arguments presented by both parties. The Tribunal's decision aimed to ensure a comprehensive review of the case in line with the legal provisions and precedents cited during the proceedings.