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2017 (5) TMI 1204 - AT - Service TaxSimultaneous Penalty u/s 76 and 78 of FA - Banking and Financial Services - Held that - simultaneous penalty u/s 76 and 78 of FA, 1994 prior to 10.2.2008, the day when there was amendment made in Section 78 of FA, 1994 will be imposable - During the period after 10.5.2008 as per the amended provisions of Section 78 if penalty is payable u/s 78, penalty u/s 76 of FA, 1994 is not to be imposed. The period involved in this case is 2006-2007 to 2008-2009. Thus the period involves the duration both prior to 10.5.2008 and after 10.5.2008. Therefore, the penalty is liable to be imposed for the offence pertaining to the period prior to 10.5.2008 under both the sections i.e. Section 76 and 78 of FA, 1993 - But for the period after 10.5.2008, no penalty u/s 76 can be imposed as already penalty u/s 78 has been imposed. The matter is remanded to the original adjudicating authority to decide the quantum of penalty u/s 76 and 78 for the contraventions pertaining to the period prior to 10.5.2008 as well as for the contraventions pertaining to the period after 10.5.2008 - appeal allowed by way of remand.
Issues:
Appeal against dropping of penalty under Section 76 of Finance Act, 1994. Analysis: The appellant, Revenue, appealed against the dropping of penalty under Section 76 of the Finance Act, 1994 by the Order-in-Appeal. The respondent, engaged in manufacturing iron and steel products, faced demands for service tax on External Commercial Borrowings (ECB) under Banking and Financial Service category. The respondent paid the demanded service tax and interest upon receiving the Show Cause Notice (SCN). The Order-in-Original sustained the service tax demand along with equivalent penalty and imposed additional penalties under Section 76 of the Finance Act, 1994. However, the penalty under Section 76 was later dropped by the impugned Order-in-Appeal, leading to the Revenue's appeal before the Tribunal. The crux of the issue revolved around the imposition of penalties under both Section 76 and Section 78 of the Finance Act, 1994. The Tribunal analyzed the applicability of penalties for the period before and after the amendment made on 10.5.2008 to Section 78. It was concluded that for the period prior to 10.5.2008, penalties under both sections were imposable, but post the amendment, only one penalty would survive. The respondent argued that if penalty was payable under Section 78, penalty under Section 76 should not apply, citing relevant court decisions. On the contrary, the Revenue contended that both penalties could be imposed, supported by various judicial precedents. The Tribunal referred to decisions by different High Courts and observed that penalties under Sections 76 and 78 operated in distinct fields, allowing for separate impositions even for offenses arising from the same transaction. The Tribunal upheld the imposition of penalties under both sections for the period before 10.5.2008. Regarding the quantum of penalties, it was noted that the penalties imposed did not differentiate between the periods before and after 10.5.2008. Thus, the matter was remanded to the original adjudicating authority to determine the penalty amounts for each period separately. Additionally, the respondent's entitlement to a waiver of 75% penalty under the First Proviso of Section 78 was discussed. The Tribunal clarified that the respondent's compliance with the 25% penalty payment option granted in the impugned order should be honored, despite the Revenue's objection. In conclusion, the impugned order was modified, and the issue of penalty under Section 76 was remanded for fresh adjudication, ensuring due process and separate determination of penalties for different periods. The appeal was partly allowed by way of remand, and cross objections were also disposed of accordingly.
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