2017 (11) TMI 36 - AT - Service Tax

Penalty u/s 76 and 78 - tax collected but not paid - tax alongwith interest paid on being pointed out - Held that - As regards the penalty imposed under Section 76, 77 and 78, the SCN was issued to the appellant on 18.09.2008 when provisions of Section 78 were amended to impose one penalty i.e. either under Section 76 or under Section 78. Since in the case in hand penalty under Section 78 has already been imposed, the penalty imposed by the adjudicating authority under Section 76 of the Finance Act 1994 upheld by the First Appellate Authority is unsustainable and liable to be set aside. Since the amount of service tax liability stands collected but not deposited with the Government of India, question of invoking Section 80 does not arise. Accordingly the appeal as regards setting aside the penalty under Section 77 and 78 is devoid of merits and liable to be rejected. Appeal allowed in part.

Summary

Issues:
Imposition of penalties under Section 76 and 78 of the Finance Act, 1994.

Analysis:
The appeal was filed against Order-in-Appeal No. 168/2012 dated 21/08/2012. The lower authorities confirmed the demand of service tax liability, interest, and penalties under Sections 76 and 78 of the Finance Act, 1994. The appellant was found to have not discharged the service tax liability to the Government Treasury despite collecting it from their client. The appellant argued that they had already paid the service tax liability and interest upon being notified by the Departmental Authorities. The appellant sought to set aside the penalties imposed under Sections 76 and 78, relying on legal precedents. The Departmental Representative reiterated the findings of the lower authorities.

Upon considering the submissions, the Tribunal upheld the impugned order regarding the imposition of penalties under Section 76 and 78 of the Finance Act, 1994. The Tribunal noted that the show-cause notice was issued before the amendment to Section 78, which allowed for penalties under either Section 76 or 78. As penalty under Section 78 had already been imposed, the penalty under Section 76 was set aside. The Tribunal found that the appellant did not contest the factual findings of non-discharge of service tax liability, leading to penalties under Sections 77 and 78. Since the tax amount was collected but not deposited with the Government, the Tribunal rejected the appeal to set aside penalties under Sections 77 and 78. Consequently, the impugned order upholding penalties under Section 77 and 78 was affirmed, and the appeal was disposed of accordingly.