2016 (9) TMI 793 - AT - Service Tax

Imposition of penalty - Section 78 of the Finance Act, 1994 - invokation of revisionary powers of the Commissioner - non-discharge of service tax liability on GTA services - Held that - it is the case of the Department that as in the earlier SCN dated 28.02.2007 there was allegation of suppression of facts and because in the earlier Order-in-Original there was imposition of penalty under Section 78, the Commissioner in the impugned order ought to have imposed penalty under Section 78 also. I cannot agree with this submission of the department. On issuance of notice under Section 84 invoking revisionary powers of the Commissioner the earlier order passed by the adjudicating authority dated 18.03.2008 has been merged in the revisionary powers exercised by the Commissioner. Further, in the SCN issued under Section 84 invoking the revisionary powers, there is no allegation of suppression of facts. It is also settled law that penalty under Section 76 and 78 cannot be imposed simultaneously. - Decided against the Revenue

Summary

Issues:
Non-imposition of penalty under Section 78 of the Finance Act, 1994.

Analysis:
The case involves the respondents engaged in the manufacture and trade of edible oils, facing a demand for service tax on Goods Transport Services (GTA) along with penalties. Initially, a demand of &8377; 4,55,208/- was confirmed by the adjudicating authority, imposing penalties under Sections 76, 77, and 78 of the Finance Act, 1994. The Commissioner (Appeals) confirmed the demand but set aside the penalties, invoking Section 80 of the Finance Act. Subsequently, a revisionary notice was issued demanding &8377; 18,20,838/- as service tax, leading to a revised demand of &8377; 13,65,630/- without penalties. The Tribunal remanded the matter for denovo adjudication, resulting in the confirmation of the service tax demand and the imposition of a daily penalty under Section 76. The appeal by the Revenue challenges the non-imposition of penalties under Section 78.

Upon hearing the arguments, the Department contended that there was suppression of facts by the respondent during the period in question, emphasizing the lack of registration and payment of service tax until instructed by the department. The Department argued that penalties under Section 78 should have been imposed due to the earlier penalties levied under Sections 76, 77, and 78. However, the Tribunal disagreed with this assertion, noting that the impugned order stemmed from a revisionary notice without allegations of suppression of facts. It was clarified that penalties under Section 76 and 78 cannot be imposed simultaneously. As the revisionary powers merged the earlier order, and no suppression of facts was alleged in the revisionary notice, the Tribunal found no grounds to interfere with the order, ultimately dismissing the appeal.

In conclusion, the Tribunal upheld the decision not to impose penalties under Section 78 of the Finance Act, 1994, emphasizing the absence of suppression of facts in the revisionary notice and the legal prohibition against simultaneous imposition of penalties under Sections 76 and 78. The appeal by the Revenue was dismissed, affirming the denovo adjudication's outcome regarding service tax demand and penalty under Section 76.