2017 (6) TMI 1220 - AT - Service Tax

Simultaneous Penalty u/s 76 and 78 - Consulting engineering service - Held that - the issue involved in the present appeal is squarely covered by the judgment of jurisdictional Gujarat High Court in the case of Raval Trading Company 2016 (2) TMI 172 - GUJARAT HIGH COURT , wherein it has been held that simultaneous penalty under Section 76 and Section 78 of the Finance Act, 1994 cannot be imposed - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Appeal against Order-in-Original for recovery of service tax under consulting engineering service category during 2005-06 and 2006-07; Imposition of penalty under Section 76 of the Finance Act, 1994 in addition to penalty under Section 78; Challenge of penalty imposition based on Gujarat High Court judgment.

Analysis:
The appeal before the Appellate Tribunal CESTAT Ahmedabad was filed against the Order-in-Original passed by the Commissioner, Central Excise, Ahmedabad, for the recovery of service tax related to providing taxable service under the consulting engineering service category during the periods 2005-06 and 2006-07. The demand for service tax, interest, and penalty under Section 78 of the Finance Act, 1994 was confirmed upon adjudication. Subsequently, the Commissioner, through revisionary powers, modified the order by imposing an additional penalty under Section 76 of the Finance Act, 1994. The appellant challenged this penalty imposition, citing a pending appeal on merit before the Tribunal as Appeal No. ST/11785/2016. The appellant argued that the imposition of penalty under Section 76, in addition to the penalty under Section 78, was legally untenable, referencing a judgment by the Hon'ble Gujarat High Court in the case of Raval Trading Company vs. C.S.T. - 2016 (42) STR 210 (Guj.).

The Advocate for the appellant contended that the simultaneous imposition of penalties under both Section 76 and Section 78 of the Finance Act, 1994 was not permissible under the law, drawing support from the Gujarat High Court judgment mentioned earlier. On the other hand, the Revenue representative reiterated the Commissioner's findings and referenced a judgment by the Hon'ble Kerala High Court in the case of Assistant Commissioner of Central Excise vs. Krishan Poduval - 2006 (1) STR 185 (Ker.). Upon examination, the Tribunal found that the issue at hand was directly addressed by the Gujarat High Court's ruling in the case of Raval Trading Company, which established that penalties under both Section 76 and Section 78 of the Finance Act, 1994 could not be imposed simultaneously. Consequently, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant.