2008 (3) TMI 113 - AT - Service Tax

Appeal against the revisional order of the Commissioner of Central Excise of enhancing penalty - orders of the Commissioner (Appeals) holding that the appellant is liable to pay service tax having been set aside by the Tribunal holding that the service provided by the appellant is not covered under Business Auxiliary Service , penalty could not be imposed on the appellant, and therefore, the impugned order of the Commissioner revising the amount of penalty must be set aside

Summary

Issues: Appeal against enhancement of penalty under Section 84 of the Finance Act, 1994.

Analysis:
1. The appellant appealed against the Commissioner of Central Excise's order enhancing the penalty from Rs.5000 to Rs.21,153 under Section 84 of the Finance Act, 1994. Section 84 empowers the Commissioner to call for records of a proceeding and pass orders as deemed fit.

2. The Assistant Commissioner assessed the taxable services provided by the appellant at Rs.2,64,415 and determined the service tax liability at Rs.21,153, imposing penalties under Sections 76 and 77 of the Finance Act. The Commissioner (Appeals) upheld the tax liability but reduced the penalty. The appellant's appeal was allowed by the Tribunal, stating that the service provided did not fall under the category of business auxiliary service, absolving them of service tax liability.

3. The Commissioner, using suo motu power under Section 84, enhanced the penalty to Rs.21,153 after the Tribunal's decision. The appellant contended that since the Tribunal had absolved them of tax liability, no penalty should be imposed. The appellant argued that the penalty revision by the Commissioner should be set aside on this ground alone.

4. The Tribunal agreed with the appellant's submission, stating that since the appellant was absolved of tax liability, imposing any penalty was unjustified. The Tribunal found merit in the appellant's argument and decided that based on this ground alone, the Commissioner's order revising the penalty amount should be set aside.

5. Consequently, the Tribunal set aside the impugned order and allowed the appeal, emphasizing that the appellant, having been relieved of tax liability, should not be subjected to any penalty. The decision was dictated and pronounced in the open court, concluding the matter.