2015 (11) TMI 168 - HC - Service Tax

Imposition of penalty u/s 76, 77 & 78 - Maintainability of appeal - Monetary limit - Held that - Revisional order came to be passed by the Commissioner of Central Excise, Trichy, vide order dated 13.12.2007, imposing penalty of ₹ 200/- per day under section 76 of Finance Act, 1994 and also a penalty of ₹ 1,000/- under Section 77 of the Finance Act, 1994. The Commissioner also imposed a penalty of ₹ 1,49,170/- on the assessee under Section 78 of the Finance Act, 1994. Therefore, it is very clear from the records that the monetary limit having been fixed at ₹ 2 Lakhs, even as per the order of the Revisional authority, the interest and penalty being less than ₹ 2 Lakhs, the appeal is not maintainable. - circular issued by the Board is squarely applicable to the facts of the present case - Decided against Revenue.

Summary

Issues:
1. Appeal against Tribunal order setting aside penalties under Sections 78, 76, and 77 of the Finance Act, 1994.
2. Tribunal's decision on the liability of the assessee to pay service tax on cargo handling services.
3. Setting aside penalties despite established intention to evade service tax.
4. Applicability of precedents and circulars in the case.

Analysis:

Issue 1:
The Revenue appealed against the Tribunal's decision setting aside penalties under Sections 78, 76, and 77 of the Finance Act, 1994. The Tribunal's order was challenged based on the suppression of facts to evade service tax, questioning the Tribunal's failure to refute the intention to evade payment or provide contrary evidence. The core contention revolved around the Tribunal's justification for setting aside the penalties imposed by the Commissioner under Section 84 of the Act.

Issue 2:
The case involved the liability of the assessee, a service provider, to pay service tax on cargo handling services rendered to a specific company. The Tribunal's decision questioned whether the assessee, who admitted to providing the services and being liable for service tax, was exempt from paying service tax. The appeal raised concerns about the Tribunal's interpretation of the liability and non-payment of service tax by the assessee.

Issue 3:
In a scenario where the intention to evade service tax was established, the issue of setting aside penalties and waiving penalties under Section 80 of the Finance Act, 1994, was contested. The Tribunal's decision to obviate the applicability of waiver based on the established intention to evade payment raised questions regarding the reasonable cause for such actions.

Issue 4:
The reliance on precedents and circulars, specifically referring to a CESTAT Delhi case and a Board circular, was a significant aspect of the appeal. The challenge was raised against the Tribunal's decision to rely on these references, which were deemed inapplicable to the facts of the present case. The dispute centered around the relevance and applicability of the cited precedents and circulars in the context of the case.

The High Court, while acknowledging the appeal's purpose, considered the maintainability issue raised by the respondent regarding the monetary limit set by the National Litigation Policy. The Court noted the Government's aim to reduce litigation and become an efficient litigant. Despite the appeal being filed before the Policy's issuance, the Court emphasized the Policy's retrospective effect in certain circumstances to achieve its objectives. Ultimately, the Court dismissed the appeal based on the monetary limit set by the Policy, emphasizing compliance with the instructions and declining to delve into the substantive legal questions raised in the appeal.