2017 (4) TMI 435 - AT - Service Tax

Imposition of penalty u/s 78 of FA, 1994 - power of revisional authority - appellant case is that initially in the SCN, there was no proposal to impose penalty u/s 78 of the FA, 1994, thus, the revisionary authority has no power to impose penalty u/s 78 of the FA, 1994 - Held that - The said SCN was never reviewed, therefore, no authority can go beyond the SCN dated 21-2-2007. Admittedly, the Revisionary Authority has gone beyond the allegation of the SCN dated 21-2-2007 - the order of Revisionary Authority to impose penalty on the appellant u/s 78 of the FA, 1994 is illegal - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against penalty under Section 78 of the Finance Act, 1994.

Analysis:
The case involved an appeal against an order imposing penalty under Section 78 of the Finance Act, 1994. Initially, a show cause notice was issued to demand service tax and impose penalties under Sections 76 and 77 of the Finance Act, 1994. The matter was adjudicated, and the proposals in the show cause notice were confirmed. Subsequently, the Revisionary Authority issued a show cause notice to impose a penalty under Section 78 of the Finance Act, 1994, which was adjudicated upon, resulting in the imposition of the penalty on the appellant.

The appellant contended that the revisionary authority exceeded its power by imposing a penalty under Section 78 as there was no such proposal in the initial show cause notice. The appellant argued that the revisionary authority cannot go beyond the allegations made in the show cause notice. On the other hand, the respondent argued that the initial show cause notice did include the proposal to impose a penalty under Section 78 and that the Revisionary Authority had the power to issue the notice.

After hearing both parties and considering the submissions, it was observed that the initially issued show cause notice did mention a contravention of Section 78 of the Finance Act, 1994 but did not propose a penalty under that section. As the show cause notice was never reviewed, it was held that no authority could go beyond its scope. The Revisionary Authority was found to have exceeded the allegations in the initial notice by imposing the penalty under Section 78.

Consequently, the order of the Revisionary Authority imposing the penalty under Section 78 was deemed illegal and set aside. As a result, the appeal was allowed with any consequential relief that may follow.