2008 (8) TMI 200 - AT - Service Tax

Penalty imposed u/s 76 and 78, in the Review Adjudication Order, passed by the Commissioner of Service Tax Asst. Commissioner in OIO did not confirm the penalty as he has found sufficient cause for not imposing the penalty since the service tax has been paid before the issue of SCN - appellants placing reliance on the case of Majestic Mobikes (P.) Ltd. v. CST wherein the similar orders have been set aside in view of this decision, penalty is set aside

Summary

Issues:
1. Contesting the levy of penalty imposed in the Review Adjudication Order by the Commissioner of Service Tax, Bangalore.
2. Imposition of penalty under sections 76 and 78 of the Finance Act, 1994.
3. Applicability of the judgment in the case of Majestic Mobikes (P.) Ltd. on the issue of penalty when service tax is paid before the issue of show-cause notice.

Analysis:
1. The appellant contested the penalty imposed in the Review Adjudication Order by the Commissioner of Service Tax, Bangalore. The Assistant Commissioner, in the Order-in-original, did not confirm the penalty due to the service tax being paid before the show-cause notice was issued. However, the Commissioner in the Review Adjudication Order imposed a penalty under challenge. The appellant relied on the case of Majestic Mobikes (P.) Ltd. where similar penalties were set aside, arguing that the penalty is not justifiable if the service tax was paid before the show-cause notice was issued.

2. The Tribunal considered the submissions from both sides and noted that the order-in-original did not impose a penalty as the service tax was paid before the show-cause notice. However, the Commissioner in the Review Order imposed a penalty under sections 76 and 78 of the Act. Citing the judgment in the case of Majestic Mobikes (P.) Ltd., the Tribunal found that the penalty was not justified if the service tax was paid before the show-cause notice. Consequently, the Tribunal set aside the penalty imposed by the Commissioner and allowed the appeal with any consequential relief.

3. In another case involving M/s. IMRB International, the Original authority imposed a penalty under sections 76 and 78 of the Finance Act, 1994, which was partially dropped by the Commissioner (Appeals). The appellant relied on the judgment in the case of Majestic Mobikes (P.) Ltd. to argue that the penalty should not be levied if the service tax was paid before the show-cause notice. The Tribunal, in line with the cited judgment, set aside the penalty and allowed the appeal, noting that the interest had been paid as required.

This comprehensive analysis covers the issues raised in the legal judgment, detailing the arguments presented, the Tribunal's considerations, and the final decisions rendered based on the applicability of relevant legal precedents.