2017 (7) TMI 529 - HC - Service Tax

Levy of penalty u/s 28 of the FA, 1994 at a reduced rate of 25% - authority of the Commissioner or the Tribunal to reduce the penalty - Held that - reliance placed in the case of Commissioner of Central Excise vs. GP Prestress Concrete Works 2012 (8) TMI 933 - GUJARAT HIGH COURT , where it was held that the assessee is required to be given an option by the adjudicating authority whether he is willing to pay the duty with interest and 25% penalty within 30 days from the date of adjudication. Whenever such option is not given, the facility of paying reduced penalty by fulfilling the condition of deposition of the same with interest within 30 days (along with tax dues if any) should be granted - appeal dismissed - decided against Revenue.

Summary

Issues:
Levy of penalty at a reduced rate of 25% under Section 28 of the Finance Act, 1994.

Analysis:
The primary issue in this case revolves around the levy of penalty under Section 28 of the Finance Act, 1994 at a reduced rate of 25%. The department contended that the penalty is mandatory, and the Commissioner or the Tribunal lacked the authority to decrease it. However, previous judgments considered by the court, such as Commissioner of Central Excise vs. GP Prestress Concrete Works and Commissioner of C. Ex, Ahmedabad-III vs. Ratnamani Metals and Tubes Ltd., highlighted the importance of providing the assessee with the option to pay duty, interest, and 25% penalty within 30 days of adjudication. Failure to offer this option should result in granting the facility of paying reduced penalty upon fulfilling the conditions within the specified timeframe.

In the present case, the adjudicating authority imposed a full penalty of 100% without granting the option of availing reduced penalty upon depositing the amount with interest within thirty days. Subsequently, when the assessee approached the Commissioner, the option of paying reduced penalty was granted if done within the stipulated timeframe. The Tribunal, relying on past decisions, dismissed the department's appeal, emphasizing the importance of providing the assessee with the opportunity to opt for reduced penalty within the prescribed period.

The court upheld the Tribunal's decision, stating that if the assessee did not utilize the option provided by the Commissioner (Appeals), the department could proceed with recovering the full penalty instead of the reduced amount specified in the order. Therefore, the tax appeal was ultimately dismissed, affirming the Tribunal's stance on the matter.