2008 (5) TMI 151 - AT - Service Tax

Equal amount of penalty - demand confirmed by original authority by invoking extended period was confirmed by appellate authority - duty liability, though denied in the present appeal, stands finalized against the party, who failed to get clearance from the CoD for contesting demand - prima facie, the penalty imposed u/s 78 is irresistible, inasmuch as the ground raised by the lower authorities for imposing the penalty is same as ground raised for invoking larger period stay partly granted

Summary

Issues:
1. Clearance from Committee on Disputes (CoD) for pursuing appeal against penalty.
2. Imposition of penalty under Section 78 of the Finance Act, 1994 for suppression of facts.
3. Demand of duty for the period October 2004 to March 2006.
4. Invocation of extended period of limitation under Section 73(1) of the Finance Act, 1994.
5. Application for waiver of predeposit and stay of recovery in respect of penalty amount.

Analysis:

1. The appellants, a Public Sector Undertaking, sought clearance from the Committee on Disputes (CoD) to pursue an appeal challenging the penalty imposed on them under Section 78 of the Finance Act, 1994. The penalty amounting to Rs. 38,02,317/- was imposed by the lower authorities for the alleged suppression of facts. The penalty was related to the demand of duty equal to the penalty amount for the period between October 2004 to March 2006. The original authority invoked the extended period of limitation under Section 73(1) of the Finance Act, 1994 to confirm the duty demand, which was upheld by the first appellate authority.

2. The duty liability, although contested in the present appeal, was finalized against the appellants as they failed to obtain clearance from the CoD to dispute the duty demand. The Tribunal noted that the grounds for imposing the penalty under Section 78 were similar to those for invoking the extended period of limitation for demanding duty. The appellants did not claim financial hardship in their application. Consequently, the Tribunal directed the appellants to pre-deposit Rs. 10 lakhs within four weeks as a condition for considering their appeal further.

3. The Tribunal emphasized that the penalty imposed was based on the same grounds as the extended period of limitation invoked for demanding duty. Since the appellants did not secure clearance from the CoD to contest the duty demand, the Tribunal found the penalty imposition justified prima facie. The absence of a plea regarding financial difficulties in the application influenced the Tribunal's decision to order the pre-deposit of Rs. 10 lakhs by a specified deadline.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Chennai highlights the key issues involved and the Tribunal's decision regarding the penalty imposition and pre-deposit requirement in the case.