2015 (12) TMI 91 - HC - Service Tax

Validity of Tribunal s order - Whether the Tribunal, while remitting the matter back, is right in law in giving a positive direction not to impose penalty on the 1st respondent, especially when the imposition of such penalty under Section 76 and 78 of Finance Act, 1994 is not only automatic but also mandatory - Held that - Once the quantum, as to whether correct amount of duty has been paid and at what stage and its implication has been left to the discretion of the adjudicating authority, on remand, it is always open to the said authority to decide the question of penalty and it cannot be restricted by any direction that no penalty should be imposed. The Tribunal cannot take away the discretion of the authority to levy penalty if it is imposable according to law. - Matter remanded back - Decided in favour of Revenue.

Summary

Issues:
1. Tribunal's direction not to impose penalty on the party.
2. Tribunal's authority to remand the matter with specific directions.

Analysis:
1. The High Court addressed the issue of whether the Tribunal was correct in giving a positive direction not to impose a penalty on the party. The Tribunal had remanded the matter back to the adjudicating authority with a direction not to impose any penalty on the party. The Court held that the Tribunal cannot restrict the authority from deciding on the penalty if it is imposable according to the law. The discretion to levy a penalty should not be taken away by any direction. The Court ruled in favor of the Revenue, stating that the assessing authority should make a decision on its own merits, including the question of penalty, on remand.

2. The second issue involved the Tribunal's authority to remand the matter with specific directions. The Tribunal had set aside the impugned order and directed the adjudicating authority to pass a fresh order without imposing any penalty on the party, after considering the worksheet provided by the party. The High Court emphasized that once the quantum of duty payment and its implications are left to the discretion of the adjudicating authority on remand, the authority should have the freedom to decide on the penalty as well. The Court concluded that the Tribunal's direction not to impose a penalty was not justified, and the assessing authority should have the power to decide on the penalty based on the merits of the case.

In conclusion, the High Court's judgment clarified that the Tribunal cannot restrict the adjudicating authority from imposing a penalty if it is warranted by law. The Court ruled in favor of the Revenue, allowing the assessing authority to make an independent decision on the penalty on remand. The judgment highlighted the importance of maintaining the authority's discretion in penalty imposition and ensuring that specific directions do not impede the legal process.