2017 (11) TMI 293 - AT - Service Tax

Penalty u/s 76, 77 and 78 - Whether the revisional authority has jurisdiction to impose penalty for the first time when it has not been imposed by the adjudicating or assessing authority by invoking Section 80? - Held that - reliance placed in the case of COMMISSIONER OF SERVICE TAX Versus M/s MOTOR WORLD & Others 2012 (6) TMI 69 - KARNATAKA HIGH COURT , where it was held that when the assessing authority in its discretion has held that no penalty is liable, by resorting to Section 80 of the Act, then the Revisionary Authority cannot invoke his jurisdiction under Section 80 and impose penalty - penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Revisionary power of the Commissioner to set aside Order-in-Original and impose penalties under Sections 76, 77, and 78 of the Finance Act, 1994.

Comprehensive Analysis:
The judgment involves an appeal against a Review Order passed by the Commissioner, setting aside the Order-in-Original and imposing penalties under Sections 76, 77, and 78 of the Finance Act, 1994. The appellant, a company providing marketing services for event tickets, was investigated for alleged service tax evasion. The appellant charged various fees related to ticket sales and sponsorship services, leading to a demand for service tax payment. The Additional Commissioner confirmed the demand but did not impose penalties, citing Section 80 of the Finance Act, as the tax and interest were paid before the show-cause notice. Subsequently, the Commissioner, using revisionary powers, imposed penalties under Section 78, leading to the present appeal.

The appellant argued that the impugned order lacked legal sustainability, as it did not consider the evidence and contradicted judicial precedents. The appellant claimed they had no intention to evade tax, promptly paid taxes upon notification, and received advice from a Chartered Accountant supporting their non-liability for service tax. The appellant highlighted that the original authority dropped penalties under Section 80, indicating no intent to evade tax, citing relevant Karnataka High Court decisions. The AR supported the findings of the impugned order.

Upon review, the Tribunal found the impugned order unsustainable in law, citing the Karnataka High Court's decision in the case of Motor World. The Tribunal held that if the assessing authority exercises discretion to waive penalties under Section 80, the Revisionary Authority cannot impose penalties under Section 78. Consequently, the Tribunal allowed the appeal, setting aside the impugned order and providing consequential relief to the appellant.

In conclusion, the judgment clarifies the limits of revisionary powers regarding penalty imposition under the Finance Act, emphasizing the importance of assessing authority discretion and compliance with legal precedents in penalty determinations.