2014 (9) TMI 213 - AT - Service Tax

Simultaneous penalty u/s 76 and 78 - it is contended that the appellant is a small service provider and, therefore, leniency should have been shown on the appellant and penalty only under one of the section should have been imposed - Held that - Since the period involved in the impugned case is prior to May 10, 2008, the penalties imposed on the appellant are sustainable. - However, appellant is liable to penalty under section 78 only to the extent of 25 per cent of the penalty imposed inasmuch as he has deposited 25 per cent of penalty along with service tax due and interest thereon within 30 days of the receipt of the order. There is merit in this argument. - Further The appellant s claim with regard to payment of penalty in excess what is permissible under section 76 needs to be verified at the end of the adjudicating authority. - Matter remitted back to adjudicating authority for verification of facts and determination of penalty - Decided partly in favor of assessee.

Summary

Issues:
1. Liability to penalty under sections 76 and 78 of the Finance Act, 1994.
2. Applicability of reduced penalty under section 78.
3. Verification of penalty payment under section 76 and section 78.

Analysis:
1. Liability to Penalty under Sections 76 and 78:
The appellant was registered under the service tax category but did not register for certain additional services rendered. A show-cause notice was issued demanding service tax, interest, and penalties under sections 76 and 78 of the Finance Act, 1994. The lower appellate authority confirmed the penalties imposed, leading to the appellant's appeal. The appellant disputed the penalties, arguing for leniency due to being a small service provider. The Revenue contended that penalties under both sections 76 and 78 were applicable before May 10, 2008, and cited relevant judgments supporting the imposition of penalties under both provisions. The Tribunal ruled that penalties under both sections were valid, as clarified in previous judgments, thereby upholding the penalties imposed on the appellant.

2. Applicability of Reduced Penalty under Section 78:
The appellant claimed to have paid the service tax demand, interest, and 25% of the penalty under section 78 within 30 days of receiving the order. The Tribunal examined the provisos to section 78, which allow for a reduced penalty if the service tax liability and interest are paid within 30 days. The appellant provided evidence of payment within the stipulated period, making them eligible for the reduced penalty. The Tribunal directed the adjudicating authority to verify the payment and refund any excess amount paid by the appellant promptly.

3. Verification of Penalty Payment under Section 76 and Section 78:
Regarding the penalty under section 76, the appellant claimed to have paid a penalty equivalent to the service tax short-paid, which might exceed the permissible penalty under the section. The Tribunal instructed the adjudicating authority to verify the penalty payment under section 76 and provide any applicable benefits. Similarly, the authority was directed to verify the appellant's claim of paying 25% of the penalty under section 78 within 30 days and refund any excess amount paid. The appeal was disposed of with these directions for further assessment and action by the adjudicating authority.