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2009 (1) TMI 180 - AT - Service TaxReduction of penalty under section 80 - In the course of cross-objections, the assessees stated that they had no intention to suppress any facts with intent to evade tax and therefore, no penalty should have been imposed upon them. This plea is not acceptable for the reason that the service tax amount was paid only after it was pointed out by the department that the assessees were liable to pay the tax However, CESTAT found no reason to interfere with the impugned order under which penalty has been reduced based on various factors such as payment of service tax before issue of notice and the submissions of the assessees who had relied upon the provisions of section 80, and reject the appeal of the revenue.
Issues: Reduction of penalty under section 76 and section 77 from the original amount imposed by the adjudicating authority.
In this case, the Revenue appealed against the reduction of penalty imposed on the respondents from Rs. 46,376 under section 76 and Rs. 50,000 under section 78 to Rs. 5,000. The Revenue cited various decisions to support their contention that the penalty should not be less than Rs. 100 per day and should not exceed Rs. 200 per day. The assessees argued that they believed their activity did not attract service tax, paid the tax with interest before the show-cause notice, and had no intention to evade payment. The Commissioner (Appeals) considered these submissions and reduced the penalty. The Tribunal referenced previous judgments to uphold the reduction of penalty, emphasizing the discretion vested in authorities to reduce penalties under section 80 of the Finance Act, 1994. The Tribunal rejected the Revenue's appeal, stating that the penalty reduction was justified based on factors such as early tax payment and reliance on section 80 provisions. Regarding the cross-objections, the assessees claimed they had no intention to evade tax and, therefore, no penalty should have been imposed. However, the Tribunal found this plea unacceptable as the tax was paid only after the department pointed out the liability. Consequently, the cross-objections were dismissed, and both the appeals and cross-objections were ultimately rejected in favor of upholding the reduced penalty amount for the respondents.
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