2016 (3) TMI 781 - AT - Service Tax

Imposition of penalty - Section 78A of the Finance Act, 1994 - Held that - this Section cannot be invoked for any aberrations by the assessee prior to 10.05.2013 as it was brought into statute with effect from 10.05.2013. Therefore, penalty is not imposable. - Decided in favour of appellant

Summary

Issues:
1. Interpretation of Section 78A of the Finance Act, 1994 for personal penalty imposition.

Analysis:
The judgment by the Appellate Tribunal CESTAT MUMBAI dealt with the issue of personal penalty imposition under Section 78A of the Finance Act, 1994. The appellant, who was the President and Group CEO of a company, appealed against the penalty imposed by the adjudicating authority. The adjudicating authority had confirmed the service tax liability on the company and imposed a penalty on the appellant under Section 78A of the Finance Act, 1994. The appellant argued that Section 78A was brought into the statute with effect from 10.05.2013 and could not be applied to the company's past aberrations. The Tribunal examined the provisions of Section 78A, which outlined penalties for specific contraventions related to service tax evasion, issuance of invoices without provision of taxable service, misuse of tax credits, and failure to pay collected amounts to the government. The Tribunal concluded that Section 78A could not be invoked for actions predating 10.05.2013. Therefore, the Tribunal found merit in the appellant's appeal and set aside the personal penalty imposed under Section 78A of the Finance Act, 1994. The appeal was allowed in this regard.

This judgment highlights the importance of interpreting statutory provisions accurately and applying them correctly to the relevant circumstances. It underscores the principle that penal provisions should be enforced in alignment with the legislative intent and temporal scope specified in the law. The Tribunal's decision provides clarity on the temporal applicability of penalties under Section 78A of the Finance Act, 1994, ensuring that legal consequences are appropriately determined based on the statutory framework in force at the time of the alleged contraventions.