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2019 (5) TMI 1145 - AT - Service TaxImposition of penalty u/s 76 and 78 of FA - revision of order - differential service tax and interest demanded were paid well before the issuance of show-cause notice - Classification of services - Rent-a-Cab Scheme Operator service or Tour Operator service? - HELD THAT - We find that service tax has been paid along with interest before issuance of show-cause notice. The original adjudicating authority has gone into the facts of the case and in exercise of his discretion imposed penalty under Section 77 of the Finance Act, 1994 and refrained from imposing penalty under Sections 76 and 78 of the Finance Act, 1994. We find that Tribunal in the case of REMAC MARKETING (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX, KOLKATA 2008 (10) TMI 88 - CESTAT, KOLKATA has taken a view that when duty and interest have been paid before the issuance of show-cause notice, penalty need not be imposed. The learned Commissioner in the capacity of the Revisionary Authority had no reason to review the original order seeking imposition of penalty under Sections 76 and 78 of the Finance Act, 1994 - appeal allowed - decided in favor of appellant.
Issues:
1. Nature of services provided by the appellant - 'Tour Operator Service' or 'Rent-a-Cab Scheme Operator' service. 2. Demand of service tax, interest, and penalties under Sections 76, 77, and 78. 3. Review of the order under Section 84 of the Act by the Commissioner of Service Tax, Bangalore. Analysis: Issue 1: Nature of services provided by the appellant The appellant, registered as a 'Tour Operator Service,' was found to be providing services akin to 'Rent-a-Cab Scheme Operator' service. The department issued a show-cause notice seeking service tax demand, interest, and penalties. The appellant contended that they were paying duty under the correct category and had paid the differential service tax and interest before the notice was issued. The original authority refrained from imposing penalties under Sections 76 and 78 due to the absence of mala fide intention. The Tribunal cited precedents where penalties were waived when duty and interest were paid before the notice. Issue 2: Demand of service tax, interest, and penalties The adjudicating authority confirmed the duty demanded, interest, and a penalty under Section 77. The Commissioner sought to impose penalties under Sections 76 and 78, which were challenged. The Tribunal noted that penalties need not be imposed when duty and interest are paid before the show-cause notice, as per precedents and Supreme Court judgments. The High Court's stance on penalty imposition within statutory provisions was also referenced. The Tribunal held that the Commissioner had no grounds to review the original order for penalties, leading to the appeal being allowed. Issue 3: Review of the order under Section 84 The Commissioner's review seeking penalties under Sections 76 and 78 was deemed unjustified by the Tribunal. Citing legal principles and precedents, the Tribunal concluded that the confirmation of penalties was not maintainable, setting aside the impugned order. The appeal was allowed, emphasizing the importance of discretion in penalty imposition within statutory limits. In summary, the Tribunal's decision centered on the correct categorization of services, the waiver of penalties when duty and interest were paid timely, and the Commissioner's unjustified review of penalty imposition. The legal analysis highlighted the significance of statutory provisions, precedents, and discretion in penalty imposition under the Finance Act, 1994.
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