2007 (7) TMI 264 - AT - Service Tax

Commissioner has failed to assign any reason for less imposition of penalty - Therefore it is felt expedient to remand the case back to the Commissioner (Appeals) for de novo proceedings to assign reasons for reduction in penalty by taking into consideration the recent judgment of Bombay High Court at Aurangabad Bench which shows there is no discretion under Section 11AC of the Central Excise. Act to award penalty lesser than evaded duty

Summary

Issues involved: Reduction of penalty amount by the Commissioner (A) without providing reasons.

Analysis:
1. Issue of reduction in penalty amount: The judgment deals with the reduction of penalty amount by the Commissioner (A) without providing any reasons for the same. The case pertains to delayed payment of Service tax along with delayed filing of Returns under sections 77 & 78 of the Service Tax Act. The appellant, aggrieved by the penalty imposed, argued that the delay was unintentional due to lack of awareness of the law provisions. The appellant contended that they paid the due amount promptly upon realization, under a bona fide belief, without any ill intention. The Commissioner (A) reduced the penalty to Rs. 25,000, which the appellant paid. However, the learned DR contended that the Commissioner (A) lacked the discretion to reduce the penalty amount and failed to provide any reasons for the reduction.

2. Lack of reasoning in the impugned order: The judgment highlights the crucial aspect of the absence of reasoning in the impugned order for the reduction in the penalty amount. The appellate tribunal observed that the Commissioner (A) did not provide any justification for the reduced penalty, which is a procedural lapse. The tribunal emphasized the necessity of assigning reasons for any reduction in penalties, especially in cases involving tax evasion. The tribunal referred to a recent judgment of the Bombay High Court at Aurangabad Bench, emphasizing the lack of discretion under Section 11AC of the Central Excise Act to impose penalties lesser than the evaded duty. Due to the absence of reasoning in the impugned order, the tribunal decided to remand the case back to the Commissioner (A) for fresh proceedings to assign proper reasons for the penalty reduction.

3. Decision and remand by the tribunal: After careful consideration of the facts and legal provisions, the appellate tribunal allowed the appeal and remanded the case to the Commissioner (A) for de novo proceedings. The tribunal directed the Commissioner (A) to provide detailed reasons for the reduction in the penalty amount, taking into account the recent judgment of the Bombay High Court. The tribunal's decision to remand the case aimed to ensure procedural fairness and adherence to legal principles regarding the imposition of penalties in tax-related matters. The tribunal's ruling underscored the importance of transparency and justification in decisions involving financial penalties to maintain the integrity of the legal process.