2015 (4) TMI 171 - AT - Service Tax

Penalty u/s 76, 77 & 78 - Invocation of Section 80 - Held that - Reason which has been pleaded by the appellant before the first appellate authority as well as before us for short levy or non-levy of service tax is on account of liquidity crisis which got worse because of various Court petitions filed by their lenders and creditors. This particular plea has not been contraverted by the revenue in the Order-in-Original or the impugned order. In our considered view, the reason the appellant has given is justifiable reason for setting aside the penalty imposed on them; which the Adjudicating Authority has rightly done so by not imposing penalties under Section 76 & 77 of the Finance Act, 1994. We invoke the provisions of Section 80 of the Finance Act, 1994 and set aside the penalty imposed under Section 78 of the Finance Act, 1994 as upheld by the impugned order. - Decided in favour of assessee.

Summary

Issues: Appeal against penalty under Section 78 of the Finance Act, 1994.

Analysis:
1. The appeal was against the penalty imposed under Section 78 of the Finance Act, 1994. The appellant did not contest the taxability of the services provided by them and had paid the entire tax liability with interest. The Adjudicating Authority confirmed the tax liability and imposed a penalty under Section 78, not under Sections 76 and 77. The first appellate authority upheld this penalty.

2. The appellant's defense for the short levy or non-levy of service tax was a liquidity crisis exacerbated by legal actions from lenders and creditors. This defense was deemed valid by the Tribunal, as it was not challenged by the revenue in the original or appellate orders. The Tribunal found this reason justifiable for setting aside the penalty, as the Adjudicating Authority correctly refrained from imposing penalties under Sections 76 and 77. The Tribunal invoked Section 80 of the Finance Act, 1994, and overturned the penalty imposed under Section 78 as upheld by the first appellate authority.

3. In conclusion, the Tribunal allowed the appeal, setting aside the penalty under Section 78 of the Finance Act, 1994. The decision was based on the appellant's valid defense of a liquidity crisis caused by legal actions from lenders and creditors, which was accepted as a justifiable reason for the non-levy of penalties under Sections 76 and 77.