2008 (6) TMI 73 - AT - Service Tax

Appellant not filed appeal against order of adjudication where it was held that assessee had wilfully suppressed and concealed the value of taxable service provided by them - Wilful suppression is one of the ingredients of Section 78 ibid and, if it is established, the assessee invites action under Section 78 in full vigour - hence penalty equal to tax is rightly imposed by revisional authority appeal is allowed by way of remand as regards the penalty under Section 76

Issues:
1. Imposition of service tax and education cess.
2. Penalties imposed under Sections 76, 77, and 78 of the Finance Act, 1994.
3. Revisional jurisdiction exercised by the Commissioner.
4. Acceptance of penalties by the party.
5. Appeal against the order of the revisional authority.
6. Validity of penalties imposed under Sections 76 and 78.
7. Application of Section 80 of the Finance Act.
8. Remand for reevaluation of penalty under Section 76.

Imposition of Service Tax and Education Cess:
The original authority confirmed a demand of service tax and education cess against the appellant for a specific period. The Commissioner, in the exercise of revisional jurisdiction, imposed higher penalties on the party under Sections 76 and 78 of the Finance Act, 1994. The appellant claimed that the entire tax amount with interest was paid before the show-cause notice, and penalties were also paid post-adjudication order. However, the revisional authority upheld the penalties, leading to the appeal.

Penalties Imposed under Sections 76, 77, and 78:
The original authority imposed penalties under Sections 76, 77, and 78 of the Act. The Commissioner revised these penalties, significantly increasing the amounts under Sections 76 and 78. The party accepted the penalties imposed by the original authority but challenged the higher penalties set by the Commissioner in the appeal.

Revisional Jurisdiction Exercised by the Commissioner:
The Commissioner exercised revisional jurisdiction under Section 84 of the Finance Act, imposing higher penalties than the original authority. The Commissioner's order included penalties per day for non-payment of service tax, adjustments of previously paid penalties, and additional penalties under Section 78. The appeal was made against this order of the revisional authority.

Acceptance of Penalties by the Party:
The party accepted the penalties imposed by the original authority under Sections 76, 77, and 78. However, the department did not fully accept the order, leading to the Commissioner's intervention and the subsequent appeal by the appellant against the revised penalties.

Validity of Penalties Imposed under Sections 76 and 78:
The Tribunal upheld the penalty imposed under Section 78 by the revisional authority, citing wilful suppression and concealment of taxable service by the party. The acceptance of this finding by the party led to the imposition of penalties under Section 78. Regarding the penalty under Section 76, the Tribunal remanded the case to the revisional authority for reevaluation, considering the High Court's partial striking down of Section 76.

Application of Section 80 of the Finance Act:
The Tribunal analyzed the application of Section 80 concerning reasonable cause for non-payment of tax. It was noted that the party's acceptance of wilful evasion findings precluded the plea of doubt or bona fide belief, thus affecting the applicability of Section 80. The Tribunal found no valid grounds for the benefit of Section 80 and remanded the evaluation of penalties under Section 76.

Remand for Reevaluation of Penalty under Section 76:
The Tribunal dismissed the appeal concerning the penalty under Section 78 but allowed it for reevaluation of the penalty under Section 76. The Commissioner was directed to determine the appropriate penalty amount under Section 76, ensuring the party's right to be heard in the process.

This detailed summary provides a comprehensive analysis of the legal judgment, addressing all the issues involved and highlighting the key points and decisions made by the Tribunal.

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