2006 (3) TMI 71 - AT - Service Tax

Penalty for non-payment of tax - Comm. (A) has set aside the penalties imposed by the lower authorities u/s 76 on the ground that in the case of Rashtriya Ispat Nigam Ltd. v. CCE, Visakhapatnam, tribunal has set aside the penalty as duty has been paid before SCN - Ratio in respect of penalties under the provisions of Central Excise law cannot be made applicable under service tax legislation - Appeals filed by the revenue are allowed

Summary

Issues involved:
- Appeal filed by Revenue challenging Commissioner (Appeals) order dated 28-5-2004 regarding penalties imposed under section 76 of the Finance Act.
- Applicability of penalty provisions under Central Excise law to service tax legislation.
- Interpretation of case laws regarding penalty quantum for delay in payment of service tax.

Analysis:
1. The judgment involves three appeals filed by the Revenue challenging the order of the Commissioner (Appeals) dated 28-5-2004. In the absence of representation from the respondents, the Revenue's representative, Ld. JDR Dr. I. Marianna, argued that the penalties imposed under section 76 of the Finance Act were set aside by the Commissioner (Appeals) based on a Tribunal decision related to the Central Excise Act. The representative contended that the service tax laws specifically provide for penalizing taxpayers for non-compliance, citing relevant case laws to support this argument.

2. The representative relied on the case law of Trans (India) Shipping (P.) Ltd v. CCE, Chennai, where it was held that a penalty of Rs. 100 per day of default was upheld under section 76 of the Finance Act, 1994. Another case law, Inma International F Security Academy (P.) Ltd. v. CCE, emphasized that the discretion to impose penalties between the maximum and minimum should be exercised based on sound judicial principles and the circumstances of the case, particularly in cases where intent to evade tax is not proven.

3. After examining the case records and considering the arguments presented, the Technical Member agreed that the penalties under Central Excise law cannot be directly applied to service tax legislation. Consequently, the order of the Commissioner (Appeals) was set aside only in relation to the conclusion on penalties imposed under section 76. The penalties imposed by the lower authorities under section 76 were reinstated, and the appeals filed by the Revenue were allowed accordingly. This decision clarifies the distinction between penalty provisions in Central Excise law and service tax legislation, emphasizing the need to interpret and apply penalties in accordance with the specific provisions of each law.