2009 (10) TMI 170 - AT - Service Tax

Penalty- A Show cause Notice was issued to the assessee proposing levy of service tax as well as interest and penalty on the allegation that the assessee had been providing rent a cab service. The adjudicating authority confirmed demand and imposed penalties under sections 75A, 76 and 77. The Commissioner revised order of the adjudicating authority and enhanced penalty imposed under section 76 equal to service tax amount. The commissioner also imposed penalty under section 78 equal to service tax amount. Held that- set aside the order and remand back the matter to decide the matter of levy of penalty afresh in accordance with law.

Issues:
Levy of service tax on renting-a-cab service, imposition of penalties under various sections of the Finance Act, 1994, lack of co-operation by the appellant, fair trial for the appellant, consideration of grievance relating to penalty under section 78, entitlement to a fair opportunity of hearing, setting aside previous orders, remanding the matter for fresh adjudication.

Analysis:

1. Levy of Service Tax:
The case involved a show-cause notice issued to the appellant proposing the levy of service tax on renting-a-cab service provided from a specific date. The adjudication resulted in a demand for service tax, interest, and penalties under different sections of the Finance Act, 1994. The appellant contested the demand, stating that the service tax had already been paid along with penalties. The Tribunal stayed the realization of the balance demand pending further proceedings.

2. Imposition of Penalties:
Penalties were imposed on the appellant under sections 75A, 76, and 77 of the Finance Act, 1994. The penalties were revised and enhanced through subsequent orders. The appellant raised objections to the penalties and pleaded for non-levy and imposition of penalties. The Tribunal noted the lack of cooperation by the appellant with the Revenue, as evidenced by the absence of replies to show-cause notices and failure to appear before the Reviewing authority.

3. Fair Trial and Consideration of Grievance:
The Tribunal emphasized the importance of providing the appellant with a fair trial and an opportunity to present a defense. It referred to the provisions of section 80 of the Finance Act, 1994, and a relevant judgment of the Delhi High Court regarding the levy of concessional penalties upon discharging tax liability within the prescribed period. The Tribunal concluded that the appellant deserved a fair opportunity to be heard and for the penalty to be re-determined following due process of law.

4. Entitlement to Fair Opportunity of Hearing:
Highlighting the appellant's entitlement to a fair opportunity of hearing, the Tribunal directed the adjudicating authority to pass a reasoned and speaking order considering the allegations in the show-cause notice, the appellant's submissions, and the applicable laws. The Tribunal stressed the need for a thorough re-examination of the penalty issue in accordance with the law and due process.

5. Remand for Fresh Adjudication:
In order to expedite the resolution of the dispute, the Tribunal set aside the previous orders and remanded the matter to the adjudicating authority for a fresh determination of the penalty. The appellant was instructed to file any replies on the matter in controversy, and the adjudicating authority was directed to schedule a hearing promptly to decide on the levy of the penalty in compliance with the law.

By providing the appellant with a fair trial, ensuring due process, and remanding the matter for fresh adjudication, the Tribunal aimed to address the issues of levy of service tax, imposition of penalties, lack of cooperation, and the appellant's entitlement to a fair opportunity of hearing in a comprehensive and legally sound manner.

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