2015 (4) TMI 614 - AT - Service Tax

Penalty u/s 77 for non appearance to summons - Commissioner reduced penalty - Held that - Under Section 70, the provision of the penalty are built in. But under section 77, the provision of imposition of penalty is flexible. Considering the nature of the service provided and the situation through which the service provider is passing, leniency is required to be shown. Moreover, I find that the appellants had already deposited an amount of ₹ 20,000/- towards penalty vide Challan dated 31.03.2010. In view of the above, I order reduction of penalty to ₹ 5000/- each against non appearance to summons dated 19.08.2008, 30.09.2008, 4.12.2008 and 18.1.2009 totally amounting to ₹ 20,000 - penalty of ₹ 200 per day is not in the nature of mandatory. Therefore it is discretion of the officer to reduce the penalty depending upon the nature of the case. I therefore did not find any infirmity in the findings of the Ld. Commissioner (Appeals) given in the impugned order - Decided against Revenue.

Summary

Issues:
1. Reduction of penalty under Section 77 by Commissioner (Appeals).
2. Discretion available to reduce penalty under Section 77.
3. Imposition of penalty under Section 77(i)(c)(iii) by the original authority.

Analysis:
1. The appeal was directed against an Order-in-Appeal passed by the Commissioner (Appeals), maintaining the penalty under Section 70 while reducing the penalty under Section 77 to a fixed amount for non-appearance to summons. The Revenue appealed to enhance the penalty. The Ld. Dy. Commissioner argued that the Commissioner (Appeals) had no discretion to reduce the penalty under Section 77(C) III. The Tribunal considered the submissions and records, noting the reduction of penalty by the Commissioner (Appeals) based on the nature of service and the situation of the service provider. The Commissioner (Appeals) had already deposited an amount towards penalty, leading to a further reduction. The Tribunal partially allowed the appeal and modified the original order accordingly.

2. The Tribunal observed that the Commissioner (Appeals) had reduced the penalty under Section 77(i)(c)(iii) based on the flexible nature of penalty imposition under Section 77 compared to Section 70. The Commissioner (Appeals) had provided satisfactory reasoning for the reduction, considering the circumstances. The Tribunal upheld the reduction, emphasizing that the penalty of Rs. 200 per day was discretionary, and the officer could adjust it based on the case's specifics. Therefore, the Tribunal found no fault in the Commissioner (Appeals)'s decision and dismissed the Revenue's appeal.

3. The original authority had imposed the penalty under Section 77(i)(c)(iii) for failure to appear before the Central Excise Officer after being summoned. The relevant provisions outlined penalties for various contraventions, with the penalty amount not being mandatory but subject to officer discretion. The Tribunal reiterated that the penalty amount was not fixed by law and could be adjusted as per the circumstances. Consequently, the Tribunal upheld the Commissioner (Appeals)'s decision to reduce the penalty, emphasizing the discretionary nature of penalty imposition under Section 77(i)(c)(iii).

In conclusion, the Tribunal's judgment focused on the flexibility of penalty imposition under Section 77, emphasizing the discretionary power of the officer to adjust penalties based on the case's specifics. The Tribunal upheld the reduction in penalty made by the Commissioner (Appeals) and dismissed the Revenue's appeal, highlighting the satisfactory reasoning provided for the penalty reduction.