2023 (3) TMI 129 - AT - Service Tax

Levy of penalty u/s 76 and 77 of FA - taxability under the category of rent-a-cab-operator services or not - deemed sale or not - the first submission advanced by the learned chartered accountant for the respondent that the appeal filed by the Department has been rendered infructuous since the impugned order had merged with the order of the Tribunal cannot be accepted - HELD THAT - The Tribunal was considering the submissions advanced by the appellant in the appeal filed by the respondent and the present appeal has been filed by the Department to assail the quantification of the penalty that has been imposed under section 76 of the Finance Act. The Tribunal had not examined this issue and so the respondent cannot be permitted to urge that this issue cannot be raised by the Department in this appeal. Levy of penalty imposed under section 76 of the Finance Act - HELD THAT - The matter has to be remitted to the Commissioner to take a decision after the demand is re-quantified pursuant to the earlier decision dated 22.12.2016 of the Tribunal. The penalty imposed under section 76 of the Finance Act in regard to the first show cause notice is set aside. With regard to the penalty imposed under section 76 of the Finance Act for the second and third show cause notices, the matter is remitted to the Commissioner for a fresh determination in the light of the provisions of section 76 of the Finance Act - Appeal disposed off.

Issues:
- Appeal against order confirming demand under 'rent-a-cab-operator' services and penalties under Finance Act
- Error in imposing fixed penalty under section 76 of Finance Act
- Dispute over service tax liability for providing vehicles and motor cabs
- Imposition of penalties under sections 76, 77, and 78 of Finance Act
- Interpretation of penalty provisions under section 76 of Finance Act
- Challenge to penalty quantification and appeal outcome

Analysis:

1. The appeal was filed to challenge the order confirming demand under 'rent-a-cab-operator' services and penalties imposed under sections 76 and 77 of the Finance Act. The appellant contended that the Commissioner erred in imposing a fixed penalty under section 76 of the Finance Act.

2. The respondent, engaged in providing vehicles and motor cabs, disputed the service tax liability, arguing that the right to use the cab was subject to VAT as a deemed sale. However, show cause notices were issued alleging taxability under 'rent-a-cab-operator' services, proposing a substantial demand for the disputed period.

3. The Commissioner confirmed the demand, interest, and penalties under sections 76, 77, and 78 of the Finance Act. The penalties were imposed for each show cause notice, detailing the amounts and periods involved, as per the provisions applicable during the disputed period.

4. The Commissioner's order addressed the imposition of penalties under sections 76 and 78, concluding that both penalties were imposable simultaneously for the period before a specific amendment date. The order detailed the penalties imposed under section 76 for each show cause notice.

5. The appellant argued that the penalty quantum should not have been predetermined and finalized at the time of the order, as per the provisions of section 76. The respondent, however, highlighted a previous Tribunal decision that set aside penalties under section 78 and allowed abatement under certain conditions.

6. The Tribunal considered the arguments and found that the appeal was not rendered infructuous, as the issue of penalty quantification under section 76 was not addressed in the previous Tribunal decision. The penalty imposed under section 76 for the first show cause notice was set aside due to the limitation period, while re-quantification was ordered for the penalties in the second and third notices.

7. Consequently, the appeal was allowed to the extent that the penalty imposed under section 76 for the first show cause notice was set aside, and the matter was remitted to the Commissioner for fresh determination regarding penalties in the second and third show cause notices, considering the Tribunal's previous decision.

This comprehensive analysis of the legal judgment provides a detailed overview of the issues raised, the arguments presented, and the final decision rendered by the Tribunal, ensuring a clear understanding of the case and its implications.

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