2012 (7) TMI 471 - AT - Service Tax

Reduction of penalty by Comm(Appeals)- penalties imposed u/s 75A,76,77,78 by original adjudicating authority - Held that - Since penalty under Section 78 has been imposed, penalty under Section 76 need not be imposed - a small scale unit need not have to be inflicted with penalties under all these sections - as the appellant is a small scale person and in view of the fact that for a period of four years the total demand for service tax comes to Rs.27,568/- it can be said that provisions of Section 80 can be applied in this case for full waiver of penalty - against revenue.

Summary

Issues:
1. Whether the service provided by the respondent is covered under Erection, Commissioning, and Installation service for the purpose of imposing service tax.
2. Whether penalties under Section 75A, 76, and 78 of the Finance Act, 1994 should be imposed on the respondent.
3. Whether the penalties imposed under Section 77 & 78 of the Finance Act, 1994 are sufficient or if additional penalties under Section 76 should be imposed.

Analysis:
1. The respondent was engaged in providing services of installing/fitting CNG/LPG kits in vehicles. The authorities initiated proceedings to demand service tax for a specific period. The original adjudicating authority confirmed a certain amount of service tax with penalties. On appeal, the Commissioner (Appeals) reduced the demand of service tax and penalties. The Revenue appealed, arguing that penalties under Section 75A and 76 should have been imposed and the penalty under Section 78 should not have been reduced equal to the service tax demanded.

2. During the hearing, the ld. A.R. representing the Revenue argued that penalty under Section 76 should have been imposed, citing relevant legal precedents. The Tribunal considered the submissions and noted that the appellant had claimed the benefit of SSI exemption, leading to a reduction in the service tax amount. The Tribunal observed that the respondent, being a small-scale service provider, did not appeal the initial order. The Commissioner (Appeals) set aside the penalty under Section 76, stating that since penalty under Section 78 was imposed, there was no need for an additional penalty under Section 76. Despite the lack of detailed reasoning by the Commissioner, the Tribunal upheld the decision, considering the respondent's status as a small-scale entity and the overall demand for service tax.

3. The Tribunal concluded that penalties under all the mentioned sections were not necessary for a small-scale service provider like the respondent, especially considering the total demand for service tax over a four-year period. The Tribunal highlighted that the provisions of Section 80 could be applied in this case due to the respondent's status. Therefore, the Tribunal upheld the Commissioner (Appeals)'s order and rejected the Revenue's appeal, emphasizing the leniency warranted for small-scale businesses and the application of Section 80 to set aside penalties.

This detailed analysis of the judgment highlights the considerations made regarding the service tax demand, penalties imposed, and the specific circumstances of the respondent as a small-scale service provider.