2008 (3) TMI 77 - AT - Service Tax

Commissioner was not justified in setting aside the penalty imposed u/s 76 on ground that tax is paid before issue of SCN in instant case it is not proved that there was no intention to evade duty - Tribunal in similar case, held that in case of failure to furnish service tax return in time, penalty under Sections 76 and 77 are imposable - appeals are remanded to the Commissioner (Appeals) for afresh decision

Summary

Issues: Setting aside of penalties under Section 76 of the Finance Act

The judgment by the Appellate Tribunal CESTAT, New Delhi dealt with the setting aside of penalties under Section 76 of the Finance Act. The appeals were filed by the Revenue against orders where penalties under Section 76 were set aside due to the absence of a proposal in the show cause notice to impose penalties under that section. The Tribunal noted that the show cause notices did contain specific proposals to impose penalties under Section 77 of the Finance Act. The Tribunal found that the Commissioner (Appeals) erred in setting aside penalties under Section 77, as there were clear averments in the show cause notices justifying the imposition of penalties under both Sections 76 and 77. The Tribunal also addressed the reliance on previous decisions by the Commissioner (Appeals) and emphasized the need for specific findings in the impugned order to support the setting aside of penalties.

The Tribunal further analyzed the grounds for setting aside penalties under Section 76, which was based on the payment of duty prior to the issuance of the show cause notice. The Commissioner (Appeals) had relied on a Tribunal decision that found no deliberate intention to evade payment of duty, leading to the setting aside of penalties. However, in the present case, such a finding was lacking. Additionally, the Tribunal referred to another case where penalties under Sections 76 and 77 were deemed imposable for failure to furnish service tax return on time. Consequently, the appeals were remanded to the Commissioner (Appeals) for a fresh decision after providing an opportunity for the respondents to be heard. The judgment concluded by disposing of the appeals through remand, highlighting the importance of specific findings and proper justification for setting aside penalties under the Finance Act.