2015 (7) TMI 310 - AT - Service Tax

Penalty under Section 76, 77 & 78 - earlier Injunction was received from court in respect to demand of tax - development of Mora to Vapi Pipeline Project on EPC basis - Held that - when the Appellant challenged the levy of tax for the period prior to insertion of Explanation 3 to Section 67 before the High Court and obtained injunction, it would be sufficient to establish that there is a prima facie case in favour of the Appellant. In such situation, there is no scope to doubt the bonafide of the Appellant. Hence, it is a fit case to invoke Section 80 of the Act, 1994 and no penal provision should be invoked. - Decided in favour of assessee.

Summary

Issues: Restoration of appeal dismissed for non-prosecution, Imposition of penalty under Sections 76 & 78 of Finance Act, 1994, Challenge to the levy of tax before the High Court, Prima facie case in favor of the Appellant.

The Appellate Tribunal CESTAT Ahmedabad considered an application for the restoration of an appeal that was dismissed for non-prosecution. After hearing both sides, the Tribunal found sufficient reason to recall the order based on legal precedents cited by the Appellant's advocate. The appeal was restored to its original number for further hearing, with the consent of both parties (Para 1-2).

Regarding the imposition of penalties under Sections 76 & 78 of the Finance Act, 1994, the Tribunal noted that the Appellant contested the penalties related to the receipt of an advance amount against which tax had not been paid. The Appellant argued a bonafide belief that no tax was leviable due to the timing of the advance receipt. However, the Commissioner of Service Tax confirmed the tax demand, interest, and imposed penalties. The Tribunal observed that the Appellant had filed a writ petition challenging the levy of tax before the High Court and obtained an injunction. Considering this, the Tribunal held that there was a prima facie case in favor of the Appellant, indicating no scope to doubt their bonafide. Consequently, the Tribunal invoked Section 80 of the Act, 1994, and set aside the penalties imposed (Para 3-8).

In conclusion, the Tribunal modified the impugned order by setting aside the penalties imposed under Sections 76, 77 & 78 of the Finance Act, 1994. The appeal was allowed in favor of the Appellant based on the established legal arguments and the prima facie case presented before the Tribunal (Para 8).