2017 (11) TMI 882 - AT - Service Tax

Penalty - cleaning services - jurisdiction of revisionary authority to impose penalty - Held that - the High Court of Karnataka in the case of CST, Bangalore Vs. Motor World 2012 (6) TMI 69 - KARNATAKA HIGH COURT has held that when the assessing authority in its discretion has held that no penalty is leviable by virtue of Section 80 of the Act, the revisionary authority cannot invoke his jurisdiction and impose penalty for the first time - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Imposition of penalty under Sections 76, 77, and 78 on the appellant by the Commissioner in exercising Revisionary Jurisdiction.

Analysis:
The appellant, engaged in providing Cleaning Services, was found to have short paid service tax, leading to the imposition of penalties under Sections 76, 77, and 78 by the Commissioner. The appellant admitted the tax liability after a visit and verification by authorities, promptly paying the due amount along with interest. The Joint Commissioner initially refrained from imposing penalties, citing the absence of intent to evade tax and the appellant's compliance. However, the Commissioner, utilizing revisionary powers, overturned this decision, leading to the present appeal.

The appellant argued against the penalty imposition, asserting their lack of intent to evade tax. They contended that upon being informed of their tax liability, they promptly paid the due amount, demonstrating good faith. Additionally, the appellant highlighted the Joint Commissioner's acknowledgment of their compliance and lack of malicious intent. The appellant further argued that the Commissioner overstepped by setting aside the Order-in-Original, which had waived penalties under Section 80.

In the appellate proceedings, both parties cited relevant legal precedents to support their positions. The appellant relied on decisions emphasizing the importance of good faith compliance and the limitations on revisionary authorities in imposing penalties. Conversely, the respondent presented cases supporting penalty imposition even in cases of belated tax payments.

Upon review, the Tribunal found in favor of the appellant, citing precedents, including a decision by the High Court of Karnataka, which restricted revisionary authorities from imposing penalties when the assessing authority had already waived them under Section 80. The Tribunal concluded that the Commissioner's decision to impose penalties was not legally sustainable, leading to the setting aside of the impugned order and granting relief to the appellant.