2016 (11) TMI 1349 - AT - Service Tax

Imposition of penalty u/s 78 - imposition of simultaneous penalty after amendment - section 76 - Held that - Section 78 has been amended w.e.f. 16/5/2008 according to which simultaneous penalties under Section 76 and 78 of the Finance Act, 1994 cannnot be imposed. In the present case the show cause notice is issued on 11/12/2008 which is after the amendment of Section 78 of the Finance Act, 1994. Therefore, it is held that penalties under Section 78 of the Finance Act, 1994 are not attracted when Section 76 penalty has been imposed upon the appellant. Penalty under Section 78 of the Finance Act 1994 is not sustainable when penalty under 76 of the Finance Act is already paid by the appellant - appeeal allowed - decided in favor of appellant.

Summary

Issues: Whether simultaneous penalties can be imposed under Section 76 and 78 of the Finance Act, 1994.

Analysis:
The appellant contested the penalty imposed under Section 78 of the Finance Act, 1994, after paying the Service Tax and penalties under Section 76. The appellant argued that simultaneous penalties under both sections cannot be imposed post the amendment to Section 78. The appellant relied on various case laws to support this argument. The Revenue, represented by the A.C. (A.R.), contended that the first appellate authority correctly imposed the penalty under Section 78, considering the amendment in the Act. The Tribunal examined the case records and the amendment to Section 78, effective from 16/5/2008. It was observed that penalties under Section 78 are not applicable when a penalty under Section 76 has already been imposed. The Tribunal held that as the show cause notice was issued after the amendment to Section 78, penalties under Section 78 are not attracted when a penalty under Section 76 has been paid. Consequently, the appeal was allowed in favor of the appellant.

This judgment clarifies the issue of imposing simultaneous penalties under Section 76 and 78 of the Finance Act, 1994. The Tribunal highlighted the importance of the amendment to Section 78, which prohibits the imposition of penalties under both sections simultaneously. By analyzing the legal provisions and case laws cited by both parties, the Tribunal concluded that penalties under Section 78 are not sustainable when a penalty under Section 76 has been paid. The decision provides clarity on the applicability of penalties in such scenarios post the amendment to the Finance Act, ensuring a fair and lawful application of penalties in taxation matters.