2017 (10) TMI 804 - AT - Service Tax

Penalty u/s 76 and 77 - Manpower Recruitment and Supply service - deliberate suppression of facts - penalty under Section 76 & 77 has not been imposed in addition to the penalty imposed under Section 78 - Held that - the learned Commissioner(Appeals) has given valid reasons for not imposing penalty under Sections 76 & 77 - appeal dismissed - decided against Revenue.

Summary

Issues:
- Appeal against Order-in-Original upholding service tax demand, interest, and penalties under Sections 75, 76, 77, and 78.
- Dispute over imposition of penalties under Sections 76 & 77 in addition to penalty under Section 78.

Analysis:
1. The appellant, engaged in Manpower Recruitment and Supply service, failed to discharge service tax liability for the period 01/02/2006 to 31/08/2006. A show-cause notice was issued, leading to a demand of ?26,68,038/- as service tax, interest under Section 75, and penalties under Sections 76, 77, and 78. The Order-in-Original confirmed the demand, interest, and penalty under Section 78, without imposing penalties under Sections 76 & 77, citing deliberate suppression of facts by the assessee to evade tax payment.

2. The Department appealed against the Order-in-Original, challenging the non-imposition of penalties under Sections 76 & 77. The Revenue argued that penalties under all relevant sections should have been imposed due to the period involved being before 16/05/2008. The Commissioner upheld the Order-in-Original, imposing only the penalty under Section 78, not under Sections 76 & 77. The Revenue contended that penalties under all sections should have been imposed.

3. The Commissioner(Appeals) justified not imposing penalties under Sections 76 & 77 by referencing the decision of the Punjab & Haryana High Court and a Tribunal judgment. The High Court decision clarified the difference between Sections 76 and 78, stating that if penalty was imposed under Section 78, penalty under Section 76 might not be justified. The Tribunal judgment distinguished between the provisions of Sections 76 and 78, emphasizing that cases of evasion with intent fall under Section 78, making it unnecessary to impose double penalties under both sections.

4. The Appellate Tribunal, after reviewing the arguments and legal precedents, upheld the Commissioner(Appeals)'s decision not to impose penalties under Sections 76 & 77. The Tribunal found no infirmity in the impugned order and dismissed the appeal of the Revenue, citing the reliance on legal reasoning from the High Court and Tribunal decisions. The judgment was pronounced in Open Court on 08/09/2017.