2009 (1) TMI 212 - AT - Service Tax

Penalty u/s 78 - no evidence in the show cause notice or in the Order-in-Original as to how the ingredient of Section 78 of the Finance Act 1994 are attracted penalty set aside.

Summary

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

Analysis:
The judgment revolves around an appeal filed by the Revenue against the setting aside of a penalty under Section 78 of the Finance Act, 1994 by the Commissioner (Appeals). The appellant, a proprietorship firm engaged in transportation and C&F agency of cement, was found liable for service tax. However, the Commissioner (Appeals) set aside the penalty imposed by the Original Adjudicating Authority under Section 78. The Commissioner (Appeals) noted that there was no evidence in the show cause notice or Order-in-Original to support the invocation of Section 78 in this case. The penalty under Section 78 was quashed, and the penalty under Section 77 was reduced to Rs. 500. Additionally, the penalty imposed on the proprietor of the firm was set aside based on the lack of separate identity between the firm and the proprietor, as established in a previous Tribunal case.

The appellate tribunal, in its analysis, highlighted that the Revenue failed to provide any evidence demonstrating willful suppression by the assessee to avoid payment of service tax. The tribunal noted that during the period in question, from 1-4-1999 to 31-3-2002, there was significant confusion in the field regarding tax liabilities. The tribunal emphasized that the Revenue merely cited Tribunal decisions without presenting any factual basis or evidence of mala fide intent on the part of the assessee. Consequently, the tribunal upheld the Commissioner (Appeals)' decision, rejecting the Revenue's appeal against the setting aside of the penalty under Section 78. The tribunal found no infirmity in the Commissioner (Appeals)' view and pronounced the decision in court, affirming the dismissal of the Revenue's appeal.