2017 (7) TMI 944 - AT - Service Tax

Penalties - revision under section 84 - Held that - the issue is squarely covered in favour of the appellant by the Division Bench of this Tribunal in the case of Sneha Minerals 2010 (7) TMI 387 - CESTAT, BANGALORE wherein in identical facts, this Tribunal set aside the penalties imposed under Sections 76, 77 and 78, and it was held that in relation to the issue pertaining to tax liability of the assessee, there was no merger between the Dy. Commissioner s decision and the Commissioner s order and consequently it is not open to the assessee to agitate the issue before this Tribunal - the imposing penalty on the appellant in exercise to the power of revision under Section 84 is not sustainable in law - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Revision of order imposing penalties under Sections 76, 77, and 78 of the Finance Act by the Commissioner of Central Excise.
- Applicability of service tax on the activity of mining of iron ores.
- Justification for imposing penalties on a service not taxable during the period.
- Exercise of discretion by the adjudicating authority in not imposing penalties.
- Comparison with binding judicial precedents and relevant legal provisions.

Analysis:

1. The appeal challenged the revision order by the Commissioner of Central Excise imposing penalties under Sections 76, 77, and 78 of the Finance Act. The appellant argued that the penalties were not sustainable in law as they were contrary to statutory provisions and binding judicial precedents. The issue revolved around the imposition of penalties on an activity that was not taxable during the period in question.

2. The appellant contended that the service of "mining of mineral" was brought under taxable service only from June 1, 2007, and was not taxable under the pre-existing classification before that date. They emphasized that an activity taxable from a specific date cannot be subject to tax under a previous classification. The appellant also highlighted the discretion exercised by the adjudicating authority in not imposing penalties due to the timely payment of service tax and interest before the show-cause notice.

3. The Tribunal referred to previous judgments, including the case of Sneha Minerals Vs. CCE, Belgaum, where penalties were set aside in similar circumstances. The Tribunal emphasized that the Commissioner's revisionary authority cannot substitute the original authority's discretion and that penalties should not be imposed without evidence of fraud, collusion, or willful misstatement.

4. The Tribunal further cited the case of CCE, Jalandhar Vs. Darmania Telecom, where it was held that penalties should not be imposed under Section 78 of the Act without reasonable cause for the failure, especially in the absence of fraud or collusion. The Tribunal also referenced the case of CCE & ST, LTU, Bangalore Vs. Adecco Flexione Workforce Solutions Ltd., emphasizing that if service tax and interest are paid before the issue of a show-cause notice, no penalty should be imposed under Section 73(3) of the Finance Act.

5. Ultimately, the Tribunal found in favor of the appellant, setting aside the penalties imposed by the Commissioner under Section 84 of the Finance Act. The decision was based on the established legal principles, previous judgments, and the lack of justification for imposing penalties on a service that was not taxable during the relevant period.

This detailed analysis of the judgment highlights the key issues, arguments presented, relevant legal precedents, and the final decision in favor of the appellant.