2015 (8) TMI 452 - AT - Service Tax

Demand of service tax - Imposition of penalty u/s 76, 77 & 78 - cable operator service - Held that - In view of the provisions of Section 67, Explanation (2) cum-tax benefit is required extended to the appellant and as a consequence the amount of demand would be reduced to ₹ 3,69,019/- As regards setting aside penalty under Section 76 is concerned, as per the judgements of Punjab & Haryana High Court in the case of CCE Vs. Pannu Property Dealers 2010 (7) TMI 255 - PUNJAB AND HARYANA HIGH COURT and CCE Vs. First Flight Courier Ltd. 2011 (1) TMI 52 - High Court of Punjab and Haryana it has in effect been held that once penalty under Section 78 has been imposed penalty under Section 76 may not be justified and need not be imposed. Accordingly, the contention of the appellant with regard to setting aside the penalty under Section 76 is sustainable. It is also seen that in the case of Ratnamani Metals Vs. CCE - 2013 (12) TMI 1397 - GUJARAT HIGH COURT , Gujarat High Court held that if the option of reduced (25% of the demand) mandatory penalty has not been extended expressly at the lower levels, the CESTAT can award such an option. - demand is reduced to ₹ 3,69,019/-, penalty under Section 76 is set aside, penalty under Section 75A and 77 are upheld and penalty under Section 78 is reduced - Decided partly in favour of assessee.

Summary

Issues:
1. Appeal against order-in-appeal upholding service tax demand.
2. Recomputation of demand as cum-tax amount.
3. Imposition and setting aside of penalties under different sections.

Analysis:
1. The appeal was filed against an order-in-appeal that upheld a service tax demand of Rs. 4,06,660 along with penalties under various sections. The demand was confirmed under cable operator service. The appellant did not contest the demand on merit but raised issues related to penalties and computation of the demand amount.

2. The appellant requested that the demand amount should be treated as cum-tax amount for recomputation purposes. The tribunal, considering Section 67, Explanation (2), agreed with the appellant. Consequently, the demand was reduced to Rs. 3,69,019. The tribunal also addressed the penalty under Section 76, citing judgments from Punjab & Haryana High Court, stating that once penalty under Section 78 is imposed, penalty under Section 76 may not be justified. Therefore, the penalty under Section 76 was set aside.

3. Regarding penalties under other sections, the tribunal upheld penalties under Sections 75A and 77. However, concerning the penalty under Section 78, it was reduced to Rs. 3,69,019. The tribunal further specified that if the demand, along with interest and penalty, is paid within 30 days of the order receipt, the penalty under Section 78 would be 25% of the reduced amount of Rs. 3,69,019. This decision was based on the Gujarat High Court judgment in the case of Ratnamani Metals Vs. CCE.

In conclusion, the tribunal partially allowed the appeal by reducing the demand, setting aside the penalty under Section 76, upholding penalties under Sections 75A and 77, and reducing the penalty under Section 78 with a provision for further reduction upon prompt payment.