2015 (6) TMI 697 - HC - Service Tax

Penalty u/s 76 - Whether Sections 76 and 80 of the Finance Act, 1994 as amended warrant levy of penalty equal to amount of Service Tax by way of mandatory condition or any discretion is left with the authorities for imposing such penalty - Held that - This is a case of deliberate suppression of facts with a willful intention to evade payment of Service Tax and the evasion would not have come to light but for the investigation conducted by the Officers. On a revision, the Commissioner (Appeals) initiated penalty proceedings and imposed penalty. The said order was confirmed by the Tribunal following the decision of the Supreme Court in the case of Union of India Vs. Dharmendra Textile Processors reported in 2008 (9) TMI 52 - SUPREME COURT , which cannot be faulted with. When there is a deliberate suppression, the provision mandates imposition of penalty. Hence, we find no reason why the Authorities should depart from imposing such penalty as mandated by the provisions of the Act. - Decision in the case of Dhandayuthapani Canteen - Vs - Customs, Excise and Service Tax Appellate Tribunal 2015 (1) TMI 812 - MADRAS HIGH COURT followed - Decided against assessee.

Summary

Issues:
Levy of penalty under Sections 76 and 80 of the Finance Act, 1994 - Discretion of authorities in imposing penalty.

Analysis:
The case involved the appellant, engaged in construction, who failed to register or pay Service Tax as required by law. The Adjudicating Authority refrained from imposing a penalty initially as the appellant had paid the service tax due before the show cause notice. However, the Commissioner of Central Excise revised the order, imposing various penalties under different sections of the Finance Act, 1994. The Commissioner held that penalty was justified due to the appellant's failure to pay the service tax. The Tribunal upheld the Commissioner's decision, citing the Supreme Court's ruling that penalty is automatically attracted in cases of suppression of facts. The Tribunal rejected the appeal, leading the appellant to approach the High Court.

Upon hearing both parties, the High Court noted that the Adjudicating Authority found deliberate suppression of facts by the appellant to evade Service Tax. The Court observed that when there is deliberate suppression, the law mandates the imposition of a penalty. The High Court referenced a previous decision where it was held that penalties can be imposed even if the tax is paid before the issuance of a show cause notice. The Court upheld the imposition of penalties in the current case, in line with the provisions of the Act and previous judicial decisions.

The High Court's decision was influenced by the Supreme Court's ruling on penalties in cases of deliberate suppression. The Court found no reason to deviate from imposing penalties as mandated by the law. The appellant was granted liberty to challenge the issue before the Commissioner, as per a previous decision. The High Court answered the question of law against the appellant, allowing them to raise the issue before the Commissioner. Consequently, the Civil Miscellaneous Appeal was disposed of with no costs incurred, and a related motion was closed.