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2018 (11) TMI 423 - HC - Service TaxPenalty u/s 78 - Held that - Considering Section 78 of the Finance Act, 1994, only in a case where any tax has not been levied or paid or short levied or short paid or erroneously refund in short or short paid or erroneously refunded by reason of (a) fraud or (b) collusion or (c) wilful mis-statement or (d) suppression of facts or (e) contravention of this Chapter, the penalty is leviable. It is not in dispute that in the balance sheet published in June 2013, the respondent Company has shown the liability of the service tax payable by them and infact, the same was paid in January 2014 alongwith interest. It is not in dispute that thereafter after approximately of a period of one year, the proceedings for penalty were initiated - Thus, the case does not fall in any of the clauses mentioned under Section 78 of the Finance Act, 1994. Appeal dismissed.
Issues:
Challenge to the order of the Customs, Excise & Service Tax Appellate Tribunal quashing penalty under Section 78 of the Finance Act, 1994. Analysis: The High Court considered the appeal challenging the order passed by the Customs, Excise & Service Tax Appellate Tribunal, which had quashed the penalty levied under Section 78 of the Finance Act, 1994. The Court noted that the respondent company had shown the liability of service tax in their balance sheet in June 2013, which was paid in January 2014 along with interest. Subsequently, after about a year, penalty proceedings were initiated. The Court highlighted that under Section 78 of the Finance Act, 1994, penalty is leviable only in cases of fraud, collusion, wilful misstatement, suppression of facts, or contravention of the Act. Upon examining the facts, the Court determined that the case did not fall under any of the specified clauses of Section 78. Therefore, the Tribunal's decision to quash the penalty was deemed appropriate as there was no error warranting the Court's interference. The Court further emphasized that since the case did not meet the criteria outlined in Section 78 of the Finance Act, 1994, the Tribunal's decision to set aside the penalty was justified. Consequently, the Court concluded that no substantial question of law arose in the present appeal, leading to the dismissal of the appeal. The Court held that the Tribunal had not erred in its decision, and there was no basis for the Court to intervene in the matter. As a result, the appeal was dismissed.
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