2016 (3) TMI 853 - AT - Service Tax

Waiver of penalty imposed under Section 76 of the Finance Act 1994 - Show cause notice was served under Section 73(1) before the enactment of Finance Bill 2015 but no order has been passed before the date of enactment - Appellant discharged the entire service tax along with interest prior to issuance of show cause notice - Held that - the provision of amended Section 76 shall be applicable. As per amended Section 76 w.e.f. 14.5.2015 if the Service Tax and interest is paid within 30 days from the date of service of notice under Sub-section (1) of Section 73 of the Act no penalty shall be payable and proceedings in respect of such service tax and interest shall be deemed to have been concluded. Here the show cause notice was issued on 16.10.2014 and the adjudication order was passed on 18.8.2015 and the appellant have discharged the entire service tax along with interest prior to issuance of show cause notice as clearly appearing in the show cause notice itself. Therefore in view of the aforesaid amended provision in terms of Section 78B(1) (b) read with Section 76 (1) proviso clause (i) the appellant is not liable to penalty under Section 76 of the Act. Therefore the penalty imposed under Section 76 is waived. - Decided in favour of appellant

Summary

Issues:
1. Imposition of penalty under Section 76 of the Finance Act, 1994.
2. Applicability of amended Section 76 in cases where show cause notice was issued before the enactment of Finance Bill 2015.
3. Interpretation of Transitory Provisions under Section 78B introduced in the Finance Budget 2015.

Analysis:
1. The appeal challenged the Order-in-Original imposing a penalty of Rs. 40,65,620 under Section 76 of the Finance Act, 1994, in addition to confirming demand, interest, and appropriation of a previously paid amount. The appellant sought waiver of the penalty through the appeal and filed a miscellaneous application for considering additional grounds.

2. The appellant's representative argued that the amended Section 76, effective from the Finance Act 2015, states that no penalty is payable if the Service Tax and interest are paid within 30 days of the show cause notice under Sub-section (1) of Section 73. As the show cause notice in this case was issued before the Finance Bill 2015 received presidential assent, the amended Section 76 should apply, making the penalty imposition erroneous.

3. The Revenue's representative reiterated the findings of the impugned order, but upon examining the provisions, it was found that the introduction of Section 78B for Transitory Provisions in the Finance Budget 2015 clarified the applicability of Section 76 in cases where the show cause notice was issued before the enactment of the Finance Bill 2015. As per Section 78B(1)(b), if no order was passed before the enactment date, the amended Section 76 applies, absolving the appellant from penalty liability.

4. The presiding Member analyzed the provisions of Section 76 and Section 78B, concluding that as the show cause notice was issued before the enactment of the Finance Bill 2015, and the appellant had paid the Service Tax and interest before the notice, the penalty under Section 76 was not applicable. The waiver of the penalty was granted, and the appeal was allowed, disposing of the miscellaneous application accordingly.