2009 (10) TMI 183 - AT - Service Tax

Review order-penalty u/s 76 78- . The appellant has come against the Review Order passed by the learned Commissioner on 4-2-2009 imposing penalty under sections 76 and 78 of the Finance Act 1994 which was not done in the order of the adjudication dated 5-2-2007. In the light of the decision of Majestic Mobikes (P.) Ltd. v. CST 2008 16 STT 296 (Bang. - CESTAT) held that- It is settled principle of the law that one shall not be exposed to adversity in appeal or review when he was not exposed to such adversity in adjudication thus the review order is unsustainable and the same is set aside. Accordingly the assessee s appeal is allowed.

Summary

Issues:
Imposition of penalty under sections 76 and 78 of the Finance Act, 1994 through a review order after two years of passing the adjudication order.

Analysis:
The appellant challenged a Review Order passed by the Commissioner imposing penalties under sections 76 and 78 of the Finance Act, 1994, which were not originally imposed in the adjudication order dated 5-2-2007. The appellant argued that the imposition of penalties through a review order was unwarranted, citing a Tribunal decision in the case of Majestic Mobikes (P.) Ltd. v. CST. The appellant contended that the review order should be set aside.

The Departmental Representative (DR) argued that the power of review was exercised properly, and the failure to exhaust the appeal remedy should not prevent the revenue from imposing penalties through a review order. The DR maintained that the review order should not be interfered with.

Upon examination of the adjudication order, the Judicial Member found that the adjudicating authority had considered the matter thoroughly and concluded that penalties under sections 76 and 78 of the Finance Act, 1994 were unwarranted based on the facts and circumstances of the case. The adjudicating authority had taken a lenient view as per the provisions in section 80 of the Finance Act, 1994, considering a reasonable cause for the failure on the part of the assessee. The Judicial Member noted that the adjudication order was acceptable to the revenue for some time before a show-cause notice for review was issued.

The Judicial Member emphasized the settled principle of law that one should not be exposed to adversity in appeal or review when they were not exposed to such adversity in adjudication. Referring to the Tribunal judgment in the case of Majestic Mobikes (P.) Ltd., the Judicial Member held that the review order imposing penalties was unsustainable and set it aside. Consequently, the appellant's appeal was allowed.