2018 (2) TMI 1564 - AT - Service Tax

Penalty u/s 78 - malafide intent - Held that - the Original Authority has come to a conclusion that there was no mala fide on the part of the respondent - also, Revenue has not raised any ground to challenge the said finding by the Original Authority - appeal dismissed - decided against Revenue.

Summary

Issues:
Appeal against non-imposition of penalty under Section 78 of the Finance Act, 1994.

Analysis:
The appeal arose from an Order-in-Original passed by the Commissioner of Customs, Central Excise & Service Tax, Ghaziabad, where the Revenue challenged the dropping of the proposal to impose a penalty under Section 78 of the Finance Act, 1994 on the respondent. The show cause notice dated 24/04/2012 raised the issue of penalty under Section 78, which was adjudicated in the impugned Order-in-Original. The Original Authority found no mala fide intention or willful intent of evading payment of service tax by the respondent, especially considering they sought clarification from the Police Headquarters regarding the payment of service tax. The Authority cited precedents like the Commissioner of Central Excise, Jalandhar Versus Darmania Enterprises and Shubam Security Service to support the decision. The Original Authority concluded that there was a reasonable cause for the respondent's failure to register and pay the due tax, hence, no penalty under Section 78 was imposed.

The Revenue raised grounds challenging the non-imposition of the penalty under Section 78, but did not contest the finding of no mala fide intention by the Original Authority. The Tribunal, after considering the arguments and precedents cited, upheld the decision of the Original Authority. The Tribunal found no merit in the Revenue's appeal and dismissed it, granting the respondent consequential relief as per law. The judgment highlighted the importance of establishing mala fide intent and reasonable cause for failure to comply with tax obligations when considering the imposition of penalties under the Finance Act, 1994. The decision emphasized the need for clear evidence of fraud, collusion, or willful misstatement to justify the imposition of penalties under Section 78, as outlined in relevant legal provisions and supported by judicial precedents.