2013 (9) TMI 955 - HC - Service Tax

Option to Deposit Dues Along with Interest and 25% of penalty - - Whether the Tribunal committed substantial error of law in granting option to the assessee to deposit the entire dues along with interest and penalty equal to 25% relying upon CCE & C, Rohtak v. M/s. J.R. Fabrics Pvt. Ltd. 2009 (4) TMI 72 - PUNJAB AND HARYANA HIGH COURT Held that - Neither the Adjudicating Authority nor the Commissioner (Appeals) gave any option to the respondent - the Tribunal was justified in giving option to the respondent which was accepted by the respondent - Since the option has been extended to the appellant to pay 25% of the penalty along with interest and other dues within 30 days there was no infirmity in the order of the Tribunal the Tax Appeal was not required to be entertained.

Summary

Issues:
Granting option to deposit dues and penalty, validity of penalty imposition, legality of Tribunal's decision.

Analysis:
The case involved a Tax Appeal where the main issue was whether the Tribunal had erred in granting the assessee the option to deposit the entire dues along with 25% interest of penalty within a specified period, leading to a restriction of penalty to 25% of the duty amount. The respondent, a manufacturing company, had availed MODVAT Credit in excess of their entitlement, leading to a demand of duty and imposition of penalty. The Tribunal upheld the demand of duty and penalty but provided the option to the appellant to pay a reduced penalty amount within a specific timeframe.

The Tribunal's decision was based on the fact that neither the Adjudicating Authority nor the Commissioner had given any option to the respondent regarding the penalty. The Tribunal's decision to grant the option was accepted by the respondent. The High Court found that since the option was extended to pay a reduced penalty amount within a specific period, there was no illegality in the Tribunal's order. Therefore, the Court answered the substantial question of law formulated in favor of the assessee against the department.

Ultimately, the High Court concluded that since the Tribunal's decision was found to be legal and valid, the Tax Appeal was not required to be entertained. Consequently, the Tax Appeal was dismissed by the Court, affirming the decision of the Tribunal regarding the penalty imposition and the option granted to the appellant.