2008 (5) TMI 108 - AT - Service Tax

C/F Agents services short payment of tax non-inclusion of all elements of taxable value in the A.V. - Commissioner (Appeals) reduced the penalty imposed u/s 76 - instant appeal has been filed by the Revenue for restoring the penalty imposed by the original authority - failure on the part of the respondents had occurred due to incorrect interpretation of the statutory provisions so Commissioner has discretion to reduce penalty below Rs. 100 per day prescribed in section 76

Summary

Issues:
1. Reduction of penalty below statutory minimum under Section 76 of the Finance Act, 1994.

Analysis:
1. The case involved a dispute regarding the imposition of penalty for short-payment of tax due during the period 1999-2003 by a company providing Clearing and Forwarding Agents' Services. The original authority demanded a differential duty, interest, and penalty, which was partially sustained by the Commissioner (Appeals). The Revenue filed an appeal challenging the reduction of penalty from Rs. 39,750 to Rs. 10,000 by the Commissioner (Appeals).

2. The main contention raised by the Revenue was that the Commissioner (Appeals) lacked jurisdiction to reduce the penalty below the statutory minimum of Rs. 100 per day under Section 76 of the Finance Act, 1994. The Revenue argued that the respondents were aware of their tax liability but had suppressed the taxable value to evade payment. Citing precedents, the Revenue emphasized that the Commissioner (Appeals) did not have the discretion to reduce the penalty below the prescribed statutory minimum.

3. The learned JDR for the Revenue presented the grounds of appeal, emphasizing the statutory provisions and the intent to evade tax payment by the respondents. On the other hand, the counsel for the respondents relied on case law, particularly a judgment by the Hon'ble High Court of Bombay, which recognized the authority's power to reduce penalties under the Finance Act based on discretion exercised reasonably.

4. The Tribunal considered the arguments and case laws presented by both parties. It noted that the lower authorities found the failure to pay the full tax in time was due to an incorrect interpretation of statutory provisions rather than deliberate omission. The Commissioner (Appeals) exercised discretion in reducing the penalty based on the circumstances and the precedent set by the Hon'ble High Court of Bombay, which allowed authorities to impose suitable penalties despite statutory provisions defining a specific range.

5. Ultimately, the Tribunal upheld the Commissioner (Appeals)'s decision to reduce the penalty to Rs. 10,000, considering the circumstances of the case and the reasonable cause for the failure to pay the full tax on time. The Tribunal found that the Commissioner (Appeals) had correctly exercised discretion in line with the law and dismissed the Revenue's appeal, affirming the reduction of the penalty amount.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the Tribunal's decision regarding the reduction of penalty below the statutory minimum under Section 76 of the Finance Act, 1994.