2016 (3) TMI 670 - AT - Service Tax

Imposition of penalties for the period 2007-08 to 2010-11 - Sections 76 & 78 of the Finance Act, 1994 - Respondents paid almost the entire amount of service tax due before issuance of show cause notice - Held that - the legislature in its wisdom has also amended the provisions of Section 78, albeit from 01.4.2011, that the penalty under Section 78 may be reduced to 50% when true and complete details of the transactions are available in the specified records. In view of the same, the equivalent penalty imposed on the Respondents under Section 78 of the Finance Act, 1994, is to be reduced to 50% of the same in respect of the first show cause notice. Also the penalty can not be imposed under Section 76 because the same is not imposable after 10.05.2008 as per the provisions itself. Therefore, in view of the Tribunal decision in case of Jivant Enterprise vs. Commissioner of Service Tax, Ahmedabad 2012 (7) TMI 164 - CESTAT, AHMEDABAD , if the show cause notices are issued after the date of amendment, penalties under Section 76 and 78 simultaneously cannot be imposed and hence setting aside the penalty under Section 76 is uninterferable. - Decided partly in favour of the Revenue

Summary

Issues:
Appeal against penalties imposed under Sections 76 and 78 of the Finance Act, 1994.

Analysis:
1. The Respondent, a service provider, did not file ST-3 returns or remit service tax collected, leading to penalties under Sections 76 and 78. The Commissioner set aside these penalties, prompting the Revenue's appeal.
2. The Revenue argued the Respondent's service tax liability for 2007-08 to 2010-11 amounted to Rs. 19,59,776, emphasizing non-payment despite awareness and delayed compliance post-investigation.
3. The Respondent acknowledged the tax liability but contested penalties, citing financial constraints and regular payments, urging leniency based on their financial difficulties and timely payments.
4. The Tribunal noted the Respondent's registration in 2008 and CENVAT credit usage, indicating awareness of obligations. Despite this, considering the circumstances, the penalty under Section 78 was reduced to 50% of the amount due, subject to prompt payment.
5. Regarding penalties under Section 76, post-amendment, simultaneous imposition with Section 78 was deemed impermissible. Relying on precedent, the Tribunal upheld the Commissioner's decision to set aside the penalty under Section 76.
6. The impugned orders were upheld with modifications, allowing the Revenue's appeal under specified conditions.

(Order dictated and pronounced in the open Court)