2014 (10) TMI 417 - HC - Service Tax

Penalty u/s 76, 77 - respondent has not filed any declaration under the Amnesty Scheme - Under the circumstances, whether the order of the CESTAT is legal and correct in setting aside the penalties imposed under Section 76, Section 77 of the Act and allowing the benefit under the Amnesty Scheme - Held that - assessee availed the benefit of Amnesty Scheme and paid duty and interest. Therefore, now the question for consideration is, as the duty and interest was not paid within the due date under the Act, the assessee is liable to pay interest under Sections 76 and 77 of the Act. Clarifying the Amnesty scheme, a circular has been issued by the department where it has been made clear that if the assessee availed the benefit of Amnesty scheme and the tax liability is determined, then he is not liable to pay any penalty. In that view of the matter, we do not see any merit in this appeal. The order passed by the Tribunal is in accordance with law - Decided against Revenue.

Issues:
1. Interpretation of penalties imposed under Section 76 and Section 77 of the Act and eligibility for Amnesty Scheme benefits.
2. Assessment of liability for interest under Sections 76 and 77 of the Act when duty and interest were not paid within the due date.
3. Legality and correctness of the CESTAT's order in granting immunity from penalty under the Amnesty Scheme.

Issue 1:
The court examined whether the penalties imposed under Section 76 and Section 77 of the Act were correctly set aside by the CESTAT, and if the respondents were entitled to benefit under the Amnesty Scheme. The court noted that the assessee had availed the Amnesty Scheme, paid duty and interest, and as per a departmental circular, if the tax liability is determined under the Amnesty Scheme, no penalty is applicable. The court found no merit in the appeal, stating that the Tribunal's order was lawful. Consequently, the substantial questions of law were resolved in favor of the assessee, leading to the dismissal of the appeal.

Issue 2:
Regarding the liability for interest under Sections 76 and 77 of the Act, the court considered whether the assessee, who paid duty and interest after the due date, was still liable for interest. The court clarified that as the assessee had availed the Amnesty Scheme benefits and paid the determined tax liability, no penalty was applicable. Therefore, the court concluded that the assessee was not liable to pay interest under Sections 76 and 77 of the Act. This decision was based on the circular issued by the department, which exempted penalties if the tax liability was settled under the Amnesty Scheme.

Issue 3:
The court assessed the legality and sustainability of the CESTAT's order in granting immunity from penalty under the Amnesty Scheme. The court found that the CESTAT's decision was in accordance with the law as the assessee had availed the benefits of the Amnesty Scheme and paid the determined duty and interest. The court upheld the Tribunal's order, emphasizing that the assessee was not liable for penalties under the Amnesty Scheme. Consequently, the court ruled in favor of the assessee and against the revenue, dismissing the appeal.

This comprehensive analysis of the judgment highlights the court's interpretation of penalties, liability for interest, and the legality of the CESTAT's order in granting immunity under the Amnesty Scheme.

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