2015 (7) TMI 273 - AT - Service Tax

Power of revisionary authority - Option to pay 25% service tax, interest and penalty - Held that - The provisions relating to extension of option and availability of option in respect of Commissioner (Appeals) and the Tribunal cannot be applied to the order of the Commissioner and this is the ground taken by the Revenue. It cannot be said that this observation is not correct. - According to Section 84 of Finance Act 1994 as it existed during the relevant time, The Commissioner can call for the records and after enquiry, pass an order as he deems fit in respect of orders passed by adjudicating authorities subordinate to him. The section also specifically provided that no order under Section 84 shall be passed by the Commissioner in respect of any issue, if an appeal against the said issue is pending before the Commissioner of Central Excise (Appeals). What emerges from the provisions of Section 84 is that Revenue has two options when it is found that the decision or order is not acceptable. One is to file an appeal before the Commissioner (Appeals) and the other one is to take up revision as per the provisions of Section 84 of Finance Act 1994. There are two views possible. The first view is that the Commissioner is in fact just revising the order or modifying the order. When I see the order passed by the Commissioner in this case, it is seen that the Commissioner in the concluding portion has stated that the order-in-original is modified to the extent mentioned by him. In the second scenario, the order is only a modification or a revision. In such a case it is possible to take a view that while modifying the order passed by the original authority, Commissioner has the liberty to modify the portion relating to the option also. Since the Commissioner has modified the order and is not considering an appeal, it can be considered as continuation of original proceedings and therefore the action taken by the Commissioner to extend the option cannot be found fault with. I consider the second view a better alternative view and therefore, I find no merit in the appeal filed by the Revenue - Decided against Revenue.

Summary

Issues:
1. Calculation of penalty under Section 78 of Finance Act 1994 based on payment made by the assessee.
2. Authority to extend the benefit of reduced penalty under Section 78 of the Finance Act.
3. Interpretation of Section 84 of Finance Act 1994 regarding the Commissioner's powers in revising orders.

Analysis:
1. The case involved a demand for service tax and penalties confirmed by the Addl Commissioner. The Addl Commissioner ordered appropriation and adjustment of the amount paid by the assessee before the show-cause notice was issued. A penalty was imposed under Section 78 of the Finance Act 1994, taking into account the payment made by the assessee. The Commissioner issued a show-cause notice to enhance the penalty amount due to non-payment of interest and 25% of the penalty along with the part amount paid by the assessee, leading to an increased penalty of &8377; 17,51,993.

2. The issue arose regarding the authority to extend the benefit of reduced penalty under Section 78 of the Finance Act. The Revenue contended that only the original authority could provide such benefit, not the Commissioner acting as a revisionary authority. The provisions of Section 78 were cited, emphasizing the conditions under which the reduced penalty could be availed, particularly in cases of increased service tax determined by appellate authorities.

3. The interpretation of Section 84 of the Finance Act 1994 was crucial in determining the Commissioner's powers in revising orders. The section allowed the Commissioner to pass orders after enquiry in respect of orders passed by subordinate adjudicating authorities. It specified that no order under Section 84 should be passed if an appeal against the issue was pending before the Commissioner of Central Excise (Appeals). The Tribunal analyzed two possible views regarding the Commissioner's actions, considering whether the order was a mere modification or a revision. The Tribunal concluded that the Commissioner's modification of the original order merged the two into a single order, leading to the rejection of the Revenue's appeal.

In conclusion, the Tribunal upheld the Commissioner's decision to extend the option for reduced penalty, considering it a continuation of the original proceedings. The judgment highlighted the complexities of penalty calculation, benefit extension under the Finance Act, and the Commissioner's powers in revising orders under the relevant legal provisions.