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2017 (2) TMI 1048 - AT - Service TaxOutdoor catering service - failure to file service tax return by due date - Penalty u/s 77 and 78 - Held that - the returns were not filed by the appellants for the period 06.01.2010 to 31.03.2010 and for 01.04.2010 to 30.09.2010. Hence, the order of Commissioner (Appeals), in so far as the imposition of penalty u/s 77 of the Act is concerned, is liable to be sustained. Penalty u/s 78 - Held that - the penalty u/s 78 requires that first the demand should be determined under sub-section (2) of Section 73 of the Act ibid - the determination of the demand of service tax u/s 73(2) ibid has not taken place in this case - Without the raising of the demand u/s 73(1) ibid and its determination by the adjudicating authority, the penalty u/s 78 of the Act is not sustainable. Appeal disposed off - decided partly in favor of appellant.
Issues: Appeal against penalties imposed under Sections 78 and 77 of the Finance Act, 1994 for failure to pay service tax and file returns.
Analysis: 1. Background: The appellants appealed against penalties imposed by the Commissioner of Service Tax for not paying service tax and not filing returns for the specified period. 2. Penalty Imposition: The show cause notice proposed penalties under Sections 78 and 77 of the Act. The appellants contested the penalty under Section 78, arguing that demand determination under Section 73(2) is a prerequisite for imposing such a penalty. 3. Legal Argument: The appellants, through their Chartered Accountant, argued that no demand was proposed in the notice, and no demand was confirmed in the Order-in-Original. They cited relevant case laws to support their stance. 4. Tribunal's Decision: The Tribunal noted that the penalty under Section 78 requires prior determination of demand under Section 73(2) of the Act. Since demand determination did not occur in this case, the penalty under Section 78 was deemed unsustainable. The Tribunal referred to the judgment in Total Security System vs. CCE, Goa, highlighting the necessity of demand determination for imposing penalties. 5. Outcome: The Tribunal set aside the penalty under Section 78 of the Finance Act, 1994, while upholding the penalty under Section 77. The appeal was disposed of accordingly, with the judgment pronounced on 31-1-2017.
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