2014 (12) TMI 40 - HC - Service Tax

Imposition of penalty - Waiver of penalty u/s 80 -Held that - As rightly pointed out on the side of the appellant/assessee, such opportunity has not been given by the Appellate Tribunal for coming to a conclusion as to whether the appellant/assessee is entitled to get such kind of benefit/exemption. Since sufficient opportunity has not been given for getting such kind of exemption, this Court is of the view to set aside the final order passed by the CESTAT and remit the matter to its file. - matter remanded back to tribunal.

Summary

Issues involved:
1. Interpretation of Sections 76 and 78 of the Finance Act, 1994 regarding penalty imposition.
2. Appellate Tribunal's power to decide on penalty section.
3. Applicability of Section 80 of the Finance Act, 1994 for penalty exemption.

Analysis:
1. The case involved a dispute over the imposition of penalties under Sections 76 and 78 of the Finance Act, 1994. The show cause notice demanded service tax, interest, and penalties under these sections. The Order-in-Original found the appellant liable for penalty under Section 78, which was upheld by the Commissioner of Central Excise (Appeals). However, the CESTAT held the appellant liable for penalty under Section 76, leading to the current appeal.

2. The appellant argued that since the Order-in-Original and the Commissioner of Appeals confirmed the liability under Section 78, the Appellate Tribunal had no authority to change it to Section 76. The appellant also contended that they had already paid the service tax and interest, and Section 80 provides for penalty exemption if sufficient reasons are shown, which the Tribunal did not consider. The respondent argued that the Tribunal correctly applied its inherent powers to decide on the penalty section based on submissions made.

3. The Court deliberated on whether the appellant should be penalized under Section 76 or Section 78. It noted that no appeal was filed by the Department against the previous orders to contest the penalty section. Despite this, the Tribunal, under Section 35C of the Central Excise Act, 1944, had the authority to make a suitable decision. The appellant's argument regarding Section 80, which allows for penalty exemption with sufficient reason, was found valid as the Tribunal did not provide an opportunity to assess this exemption. Consequently, the Court allowed the appeal, setting aside the Tribunal's order and remitting the matter for further consideration on the exemption issue.