2015 (4) TMI 780 - AT - Service Tax

Levy of simultaneous penalty u/s 76 & 78 - Packing service - Held that - With effect from 16.05.2008, penalties under Sections 76 and 78 ibid were made mutually exclusive in-as-much-as if the penalty under Section 78 was imposed, the penalty under Section 76 was made unimposable. This amendment with effect from 16.05.2008 in a way reflected the refinement of penal provisions. Indeed it has been held by Punjab and Haryana High Court in the case of CCE Vs. M/s. Pannu Property Dealers, Ludhiana 2010 (7) TMI 255 - PUNJAB AND HARYANA HIGH COURT that even if technically, scope of sections 76 and 78 of the Act may be different, as submitted on behalf of the revenue, the fact that penalty has been levied under section 78 could be taken into account for levying or not levying penalty under section 76 of the Act. In such situation, even if reasoning given by the appellate authority that if penalty under section 78 of the Act was imposed, penalty under section 76 of the Act could never be imposed may not be correct, the appellate authority was within its jurisdiction not to levy penalty under section 76 of the Act having regard to the fact that penalty equal to service tax had already been imposed under section 78 of the Act. This thinking was also in consonance with the amendment now incorporated though the said amendment may not have been applicable at the relevant time. Further in the case of CCE Vs. First Flight Courier 2011 (1) TMI 52 - High Court of Punjab and Haryana Punjab & Haryana High Court held that penalty under Section 76 may not be justified if penalty under Section 78 has been imposed even if technically penalties under both sections could be imposed and that the appellate authority was well within its jurisdiction not to levy penalty under Section 76 having regard to the fact that penalty under Section 78 has been imposed. - Decided against Revenue.

Summary

Issues:
1. Appeal against penalties under Sections 76, 77, and 78 of the Finance Act, 1994.
2. Interpretation of penalties under Sections 76 and 78 of the Act.
3. Applicability of penalties under Sections 76 and 78 in the case of service tax demand.

Analysis:
1. The Revenue filed an appeal against the Order-in-Appeal that set aside the penalty under Section 76 while upholding penalties under Sections 77 and 78. The service tax demand was confirmed for packaging services related to bottling LPG for companies like HPCL and BPCL. The Revenue contended that penalties under Sections 76 and 78 were not mutually exclusive during the relevant period, citing judgments such as BCCI Vs. CST, Mumbai-I and ACIT Vs. Krishna Poduval, to support their argument.

2. The Tribunal considered the contentions of the Revenue and noted that penalties under Sections 76 and 78 became mutually exclusive from 16.05.2008 when a proviso was added to Section 78. The amendment reflected a refinement of penal provisions. Referring to the case of CCE Vs. M/s. Pannu Property Dealers, Ludhiana, the Tribunal highlighted that even if penalties under Sections 76 and 78 technically had different scopes, the imposition of a penalty under Section 78 could influence the decision on imposing a penalty under Section 76. The Tribunal also referenced the case of CCE Vs. First Flight Courier, where it was held that penalty under Section 76 may not be justified if a penalty under Section 78 has been imposed, even if technically both penalties could apply.

3. In light of the judgments from the Punjab & Haryana High Court and the amendments to the Act, the Tribunal concluded that the appellate authority was within its jurisdiction not to levy a penalty under Section 76 considering a penalty equal to the service tax had already been imposed under Section 78. The Tribunal found that the impugned order did not have any grave illegality or impropriety to warrant interference, leading to the dismissal of the Revenue's appeal. Consequently, the Respondents' cross-objections were disposed of as infructuous.