2019 (3) TMI 768 - AT - Service Tax

Penalty u/s 77 and 78 of FA - Applicability of judgment of Hon ble Apex Court in the case of T Barai Vs. Henry AH Hoe and another 1982 (12) TMI 186 - SUPREME COURT OF INDIA - case of Revenue is that the judgment of Hon ble Apex Court was in the context of criminal law and the ratio would not apply to the present case - whether the ratio of the judgment with respect to criminal laws also applies to taxation statutes? - Held that - Whenever any taxation law is made or amended, such law call or amendment comes into force from the date when the law is enacted or the amendment is made. It does not apply in the cases which were of prior to this date. The ratio of this judgment has been consistently followed by this Bench in deciding the matters relating to taxation and exemptions etc. Even where an explanation has been inserted in the section or rule, unless there is a contrary pronouncement of a higher judicial forum, such explanations have always been considered to have prospective application and not retrospective application. Constitutional Bench of Hon ble Apex Court in the case of Dilip Kumar 2015 (12) TMI 247 - SUPREME COURT , held that taxation statutes should be strictly interpreted in the way they are drafted and there is no scope for any intendment in it. It does not matter whether any hardship is caused to any one or a person goes tax free because of the language of the statute. The ratio of the above two judgments of Hon ble Apex Court which prevail over any other decisions leaving me with no choice but to uphold that section 77 applies to the case of appellant as it stood during the relevant period because there is no contrary intention indicated in the amended statute - appeal dismissed - decided against appellant.

Summary

Issues:
Interpretation of penalty provisions under section 77 of the Finance Act, 1994 in the context of subsequent amendments reducing penalties.

Analysis:

Issue 1: Interpretation of Penalty Provision under Section 77:
The case involved a dispute regarding the imposition of penalties under section 77 of the Finance Act, 1994. The appellant contested the amount of penalty imposed, arguing that subsequent amendments in 2013 prescribed a uniform penalty of ?10,000 for not taking registration before rendering taxable services. The appellant claimed they should benefit from the reduced penalty even for offenses committed before the amendment. The appellant relied on the judgment of the Hon'ble Apex Court in T Barai Vs. Henry AH Hoe to support their argument that if a subsequent amendment provides for a lesser punishment, the accused should be liable to the lesser punishment. The appellant also cited tribunal orders where penalties under section 78 were reduced based on amended provisions.

Issue 2: Applicability of Amendments to Penalty Provisions:
The departmental representative argued that the judgment of the Hon'ble Apex Court was in the context of criminal law and should not apply to taxation statutes. They contended that tax statutes should be interpreted to have only prospective effect unless a contrary intention is apparent in the statute itself. The representative emphasized that no penalty under the amended section 77 should apply to offenses committed before the amendment date.

Issue 3: Interpretation of Taxation Statutes:
The Tribunal analyzed the applicability of the judgment in T Barai Vs. Henry AH Hoe to taxation statutes. They referred to the Constitutional Bench decision in Vatika Township Pvt. Ltd., emphasizing that taxation statutes should have prospective application unless a contrary intention for retrospective effect is explicitly stated in the legislation. The Tribunal also cited the Hon'ble Apex Court's decision in Dilip Kumar, stating that taxation statutes should be strictly interpreted as drafted without room for intendment, regardless of any resulting hardships.

Conclusion:
After considering arguments from both sides and examining relevant judgments, the Tribunal upheld that section 77 should apply to the appellant as it stood during the relevant period. The Tribunal emphasized that taxation statutes should be interpreted and applied in accordance with their language during the relevant time, following the principles established by the Hon'ble Apex Court. Consequently, the appeal was rejected, and the impugned order imposing penalties under section 77 was upheld.