2014 (12) TMI 788 - AT - Service Tax

Penalty u/s 76 & 78 - Held that - Adjudicating Authority has not imposed the penalties under Section 76 which was contested by the Revenue before the First Appellate Authority and the First Appellate Authority also concurred with the views of the Adjudicating Authority. I find that the contention raised by the Learned Department Representative are having strong force inasmuch as the show cause notice which is issued in this case is on 14-2-2008 and the provisions of Sections 76 and 78 for imposition of penalties were invoked. The provisions of Section 78 of the Finance Act, 1994 were amended from 16-5-2008 which provided for imposition of penalties either under Section 76 or 78. In the facts and circumstances of this case, since the show cause notice is issued prior to the amendment, I find that both the Lower Authorities were in error in not imposing penalties under Sec 76 of Finance Act, 1994. The orders of both the Lower Authorities are liable to set aside to the extent they held the penalties under Section 76 cannot be imposed. Impugned order is set aside - Decided in favour of Revenue.

Summary

Issues: Revenue's appeal against non-imposition of penalty under Section 76 of the Finance Act, 1994.

Analysis:
1. The appeal was filed by the Revenue against the Order-in-Original (OIO) No. RKA/221/SRT-I/2011, dated 20-7-2011, where the First Appellate Authority ruled that the appellant was not liable to penalize under Section 76 as the penalty under Section 78 had been deposited. The respondent did not appear despite notice, leading to the matter being disposed of in their absence.

2. The Department Representative argued that the show cause notice for duty demand and penalties was issued before the amendment to Section 78 of the Finance Act, 1994. Referring to a judgment from the Hon'ble High Court of Delhi, the Representative contended that penalties should be imposed under Section 76. Upon review, it was found that the Adjudicating Authority did not impose penalties under Section 76, a decision upheld by the First Appellate Authority. Given the timing of the show cause notice and the subsequent amendment to Section 78, it was concluded that penalties under Section 76 should have been imposed.

3. The Tribunal noted that the show cause notice was issued before the amendment to Section 78, which allowed penalties under either Section 76 or 78. Consequently, both Lower Authorities erred in not imposing penalties under Section 76. Therefore, the orders of the Lower Authorities were set aside, and the appeal was allowed, leading to the imposition of penalties under Section 76 of the Finance Act, 1994.

This detailed analysis outlines the key arguments, considerations, and the ultimate decision of the Appellate Tribunal CESTAT AHMEDABAD regarding the imposition of penalties under Section 76 of the Finance Act, 1994 in the case at hand.