2012 (8) TMI 719 - AT - Service Tax

Demand of service tax penalty - appellants were providing the service of cable operators - they did not pay service tax as applicable Held that - There is no case for imposing penalty for an amount more than net tax liability - penalty under Section 78 is reduced - penalty under Section 76 is waived - appellant is given an opportunity to pay 25% of the penalty under Section 78 in 30 days of receipt of the order

Summary

Issues:
1. Waiver of pre-deposit of dues for stay petition.
2. Service tax liability of cable operators for the period January 2004 to March 2005.
3. Adjudication of duty demand, penalties under Sections 76, 77, and 78.
4. Appeal to Commissioner (Appeals) and reduction of duty demand.
5. Imposition of penalties under Sections 76 and 78.
6. Arguments regarding Cenvat credit and penalty amounts.
7. Precedents cited for penalty imposition.
8. Decision on penalties, waiver, and payment terms.

The judgment by the Appellate Tribunal CESTAT, New Delhi involved the waiver of pre-deposit of dues for a stay petition due to a matter of short issue, allowing the appeal for disposal. The case concerned cable operators who had not paid service tax from January 2004 to March 2005, leading to a Show Cause Notice for Rs.97,286/- in unpaid tax and penalties under Sections 76, 77, and 78. The Commissioner (Appeals) reduced the duty demand to Rs. 40,131/-, allowed Cenvat credit of Rs. 21,242/-, and imposed penalties under Sections 76 and 78, leading to a submission by the Counsel that the penalty should be based on the net duty liability of Rs. 18,889/-.

The Counsel further argued citing a decision by the Hon'ble Punjab & Haryana High Court that penalties under Section 76 and 78 should not be imposed simultaneously. The Counsel requested the waiver of penalty under Section 76 and a concession to pay 25% of the penalty equal to the net duty demanded, referring to a Delhi High Court case. The ld. A.R. contended that penalties were imposed due to late tax payment, leading to a decision that penalties should not exceed the net tax liability. Consequently, the penalty under Section 78 was reduced to Rs. 18,889/-, penalty under Section 76 was waived, and the appellant was granted 30 days to pay 25% of the penalty under Section 78, with full penalty becoming payable if not paid within the specified timeframe.

In conclusion, the stay petition and appeal were disposed of accordingly, with the Tribunal addressing the issues of duty demand, penalties under Sections 76 and 78, the application of Cenvat credit, and the precedent for penalty imposition, resulting in a final decision on the penalties, waiver, and payment terms for the appellant.