2008 (7) TMI 125 - AT - Service Tax

Discretionary powers available to the Original Authority under Section 80 - once the Original Authority has examined the reasonable grounds and found not fit for imposing penalty, then the same cannot be revised by the Commissioner - impugned order imposing penalty is set aside by allowing the appeal

Summary

Issues:
1. Imposition of penalty under Sections 78 and 76 of the Finance Act.
2. Consideration of reasonable grounds for not paying Service Tax in time.
3. Applicability of discretionary powers under Section 80 of the Finance Act.
4. Interpretation of the term "reasonable cause" in penalty imposition.

Analysis:
1. The appeal arose from an Order-in-Review imposing penalties under Sections 78 and 76 of the Finance Act. The Original Authority noted no penalty was leviable as Service Tax had been paid under the Amnesty Scheme. However, the Commissioner imposed penalties due to a delay in payment. The Bench referenced a judgment by the Karnataka High Court and set aside the penalties, emphasizing that if tax was paid before the show cause notice, penalties were not justified.

2. The Appellant argued that the Revisionary Authority's imposition of penalties was unjustified, as the Original Authority had accepted reasonable grounds for late payment and the tax was paid under the Amnesty Scheme. The Tribunal, referencing various judgments, including the Karnataka High Court's decision, held that once the Original Authority found no grounds for penalty, the Commissioner could not revise it. The Tribunal also considered the term "reasonable cause" and a Supreme Court ruling, deciding to set aside the penalty.

3. The Appellant highlighted the absence of discussion on the discretionary powers under Section 80 of the Finance Act for not imposing penalties. The Tribunal, following previous judgments and legal principles, found that the Original Authority's decision on reasonable grounds was final and could not be revised. The Tribunal's decision was influenced by the interpretation of "reasonable cause" and legal precedents, leading to setting aside the penalty imposition.

4. The Judgment referenced various legal precedents and interpretations to support the decision to set aside the penalty. The Tribunal extensively analyzed the issue, considering previous judgments, the term "reasonable cause," and a Supreme Court ruling. By aligning with legal principles and precedents, the Tribunal concluded that the penalty imposition was not justified and allowed the appeal with consequential relief.