2017 (5) TMI 705 - AT - Service Tax

CENVAT credit - penalty u/s 76 - the provisions of Section 78 have been amended w.e.f. 10.05.2008 - effect of amendment, whether prospective or retrospective? - Held that - the liability for any violation of law is governed by the law applicable at the time of such violation. The amendments carried out in the statutory provisions of Finance Act, 1994 are prospective in nature unless otherwise stated. If the effect of the amendment is omission of penalty in certain cases, the general clauses Act would still be operative and penalty would be liable as per the provisions at the time of offence and not at the time of issuance of notice - penalty upheld. Regarding denial of cenvat credit - duty paying invoices - denial on the ground that no supporting documents for receipt of duty paid inputs have been submitted by the appellant - Held that - the credit can be availed only on the basis of valid documents. In the present appeal, there is nothing to controvert the findings on facts as recorded in the impugned order - credit not allowed. Appeal dismissed - decided against appellant.

Summary

Issues:
Imposition of penalties under Sections 76 and 78 for service tax liabilities and denial of cenvat credit.

Analysis:
The appeals dealt with the issue of imposition of penalties under Sections 76 and 78 for service tax liabilities and denial of cenvat credit. The appellants, engaged in construction work, were registered with the Service Tax Department. The Revenue alleged that the appellants did not discharge their service tax liability properly for a specific period and issued show cause notices to demand and recover the tax liabilities and impose penalties. The appellants contested the penalties imposed under both Sections 76 and 78, as well as the denial of cenvat credit. The main contention was whether penalties under both sections could be imposed simultaneously, especially before the amendment in Section 78 on 10.05.2008. The appellants argued that penalties under Sections 76 and 78 were mutually exclusive, citing relevant court decisions. On the other hand, the Revenue argued that penalties under both sections could be imposed in the same case, referring to different court decisions supporting their stance.

The Tribunal analyzed the legal provisions and court decisions regarding the imposition of penalties under Sections 76 and 78. It noted that Section 78 was amended on 10.05.2008, stating that if a penalty is payable under this section, the provisions of Section 76 shall not apply. The Tribunal referred to the judgment of the Hon’ble Delhi High Court in a similar case, which clarified that penalties under Sections 76 and 78 operate in different fields. The Tribunal also highlighted that the amendment in Section 78 was prospective and did not have retrospective effect. It further mentioned a case where the appellate authority had discretion not to levy a penalty under Section 76 when a larger penalty was imposed under Section 78. Based on the legal analysis and precedents, the Tribunal concluded that penalties under both Sections 76 and 78 could be imposed in the same case before the 2008 amendment.

Additionally, the Tribunal addressed the issue of denial of cenvat credit, noting that the denial was based on the lack of supporting documents for duty paid inputs. The Tribunal emphasized that credit could only be availed based on valid documents and found no grounds to overturn the findings on this matter. Consequently, the Tribunal dismissed the appeals, stating that there was no merit in the appellants' contentions and upheld the lower authority's decision on penalties and denial of cenvat credit.