2010 (2) TMI 427 - AT - Service Tax

Penalty - The assessee are engaged in providing cable network services. On the ground that the assessee had short-paid service tax to the tune of Rs. 44,473 during the period October 2002 to March 2005 by suppressing the amount of collection from their customers, service tax with interest has been demanded. Assistant Commissioner imposed penalty of Rs. 44,473 under both section 76 and 78. in revision Commissioner imposed additional penalty u/s 76 of Rs. 44,473. held that- revenue s contention in appeal that Commissioner had failed to impose penalty u/s 78 was to be recjected.

Summary

Issues:
1. Imposition of penalty under sections 76 and 78 of the Finance Act, 1994.
2. Failure to impose penalty under section 78 of the Finance Act, 1994.
3. Applicability of penalty under section 76 of the Finance Act, 1994.

Issue 1: Imposition of penalty under sections 76 and 78 of the Finance Act, 1994:
The case involved M/s. Classic Cable Network, engaged in providing cable network services, who were found to have short-paid service tax amounting to Rs. 44,473 during the period from October 2002 to March 2005. The Assistant Commissioner initially imposed a penalty of Rs. 44,473 under both section 76 and section 78 of the Finance Act, 1994. However, the Commissioner, through a show-cause notice, proposed a revision of the Order-in-Original and ultimately imposed a penalty of Rs. 44,473 only under section 76 of the Act. The Revenue appealed against this decision, arguing that the Commissioner failed to impose the penalty under section 78 of the Finance Act, 1994, despite acknowledging the liability. The Commissioner's order was challenged on the grounds of incorrect imposition of penalties under the relevant sections.

Issue 2: Failure to impose penalty under section 78 of the Finance Act, 1994:
The Revenue contended that the Commissioner erred in not imposing the penalty under section 78 of the Finance Act, 1994, in addition to the penalty under section 76. The Revenue relied on a decision of the Hon'ble Kerala High Court to support the argument that penalties under sections 76, 77, and 78 are imposable concurrently. The Commissioner's order was scrutinized for the omission of penalty under section 78, despite the adjudicating authority having initially imposed penalties under both sections 76 and 78. The discrepancy between the initial penalty imposition and the revised order was a crucial point of contention in the appeal.

Issue 3: Applicability of penalty under section 76 of the Finance Act, 1994:
The Commissioner's order in revision clarified that the assessee was liable to pay a penalty under section 76 of the Finance Act, 1994, in addition to the penalty under section 78. The Commissioner emphasized that the penalty should be equal to the service tax amount not paid, which in this case was Rs. 44,473. The order highlighted that the penalty under section 76 should not exceed the amount of service tax that the assessee failed to pay. This interpretation of the penalty provisions under section 76 was crucial in determining the final penalty amount imposed on the appellant.

In conclusion, the appeal was deemed infructuous based on the observations made by the Commissioner in the order in revision. The Commissioner's interpretation of the penalty provisions under sections 76 and 78 of the Finance Act, 1994 led to the rejection of the appeal. The case highlighted the importance of accurate penalty imposition and the necessity to adhere to the provisions of the Finance Act to ensure appropriate enforcement of tax liabilities.