2008 (12) TMI 369 - HC - Service Tax

Penalty- The Assessee is a service provider under the category of Architect Service and delayed payment of service tax by 1197 days. The adjudicating authority imposed penalty of only Rs. 100/-, taking a lenient view. The revisional authority set aside the said order and held that assessee had not given any valid explanation, in absence of which, Section 80 of the Act could not be invoked for setting aside the penalty. On appeal of the assessee, the Tribunal set aside the order of revisional authority relying upon judgment of Karnataka High Court in the case of CCE Bangalore v. Sunitha Shetty 2005 -TMI - 170 - HIGH COURT (KARNATAKA) BANGLORE. Held that- remand the case to the Tribunal or to the revisional authority for fresh decision but having regard to the fact that the amount involved in this appeal is not significant, refrain from interfering with the impugned order while expressing our disapproval to the manner of disposal of the matter by the Tribunal.

Summary

Issues:
1. Whether the Tribunal's order setting aside the penalty enhancement under Section 76 of the Finance Act, 1994, due to tax deposit legality and absence of reasonable cause for waiver is valid.
2. Whether the Tribunal correctly relied on the judgment of the High Court of Karnataka without discussing its application in the case.

Issue 1:
The case involved an appeal by the Revenue under Section 35(G) of the Central Excise Act, 1944, regarding the imposition of a penalty on a service provider for delayed payment of service tax by 1197 days. The adjudicating authority imposed a lenient penalty of Rs. 100, which was set aside by the revisional authority, stating that the assessee failed to provide a valid explanation, making Section 80 of the Act inapplicable for penalty waiver. The Tribunal, however, overturned the revisional authority's decision, citing a judgment of the Karnataka High Court. The Revenue argued that the Karnataka High Court judgment was not applicable to the present case as the revisional authority had specifically found that Section 80 of the Act was not applicable due to the lack of a valid explanation from the assessee.

Issue 2:
The Revenue contended that the Tribunal's decision to rely on the Karnataka High Court judgment without discussing its application in the present case was erroneous. The assessee, on the other hand, argued that they had provided an explanation regarding a stay granted by the High Court, which was not considered by the revisional authority or the Tribunal. The Tribunal's order was criticized for lacking a thorough discussion on whether the assessee had indeed provided a valid explanation, and the revisional authority was also faulted for not adequately addressing the explanation provided by the assessee.

In conclusion, the High Court refrained from interfering with the Tribunal's decision despite expressing disapproval of the manner in which the matter was handled. The Court acknowledged that ordinarily, the case would have been remanded for a fresh decision due to the lack of proper discussion on the validity of the assessee's explanation. However, considering the insignificance of the amount involved in the appeal, the Court chose not to intervene but criticized the Tribunal's handling of the case.