2014 (6) TMI 424 - AT - Service Tax

Demand of the differential service tax - Penalty u/s 76 & 78 - Held that - show cause notice was issued on 16.10.2009 i.e. after the amendment was made under Section 78 of the Finance Act, 1994. In my view, both the lower authorities had concurrently held that provisions of Section 78 having been invoked and penalty imposed, Section 76 penalty may not be justified is a correct conclusion that has been arrived, in view of the decision of the Hon ble High Court of Punjab and Haryana in the case of First Flight Courier Ltd. 2011 (1) TMI 52 - High Court of Punjab and Haryana - Decided against Revenue.

Summary

Issues Involved:
- Non-filing of returns and non-payment of service tax liability
- Imposition of penalties under Section 76 and 78 of Finance Act, 1994

Analysis:

Issue 1: Non-filing of returns and non-payment of service tax liability
The appeal was filed by the revenue against the Original Order of the lower authorities. The appellant had not filed returns or discharged the service tax liability from April 2005 to March 2009, despite being registered with the authorities. The show cause notice was issued for demanding the differential service tax liability and imposing penalties under Section 76 and 78 of the Finance Act, 1994. The adjudicating authority did not impose penalties under Section 76, a decision that was upheld by the first appellate authority as well. The Departmental Representative argued that the decision of the Hon'ble High Court of Kerala and the Hon'ble High Court of Delhi in similar cases should be considered. However, the Tribunal noted that the show cause notice was issued after an amendment was made under Section 78 of the Finance Act, 1994. The Tribunal concurred with the lower authorities that invoking Section 78 and imposing a penalty meant that imposing a penalty under Section 76 may not be justified, citing the decision of the Hon'ble High Court of Punjab and Haryana in a relevant case.

Issue 2: Imposition of penalties under Section 76 and 78 of Finance Act, 1994
The Tribunal found that the concurrent decision of the lower authorities to impose penalties under Section 78 and not under Section 76 was appropriate in this case. Citing the decision of the Hon'ble High Court of Punjab and Haryana in a specific case, the Tribunal upheld the impugned order and rejected the appeal, concluding that there were no merits in the appeal based on the circumstances and legal precedents presented.

In conclusion, the Tribunal upheld the decision of the lower authorities regarding the imposition of penalties under Section 78 and not under Section 76, based on the specific circumstances of the case and relevant legal precedents, ultimately rejecting the appeal filed by the revenue.