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TMI Blog2016 (7) TMI 637X X X X Extracts X X X X X X X X Extracts X X X X ..... sight of. This is a case where the tax paid by the Respondent is eligible for credit for themselves. It is, therefore, very clear that when the situation is revenue-neutral, the aspect of malafide fails. - No penalty - Decided against the revenue. - Appeal No.ST/580/2011 - FINAL ORDER No.41107/2016 - Dated:- 14-7-2016 - SHRI P.K.CHOUDHARY, JUDICIAL MEMBER Shri L. Paneerselvam, AC (AR), For the Appellant Ms. Padmavati Patil, Advocate, For the Respondent ORDER Revenue has filed this appeal against impugned Order-in-Appeal No.147/2011 dt. 19.9.2011 passed by Commissioner of Central Excise (Appeals), Chennai. The issue relates to imposition of penalties imposed on the respondent under Section 77 78 of the Finance Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 76. On appeal, the learned Commissioner (Appeals) upheld the OIO in so far as the demand of ₹ 24,01,066/- with interest. He, however, set aside penalty under Section 77 78, by invoking Section 80 of the Finance Act. Hence the Revenue has filed the present appeal seeking restoration of OIO and for setting aside OIA. 3. Shri L. Paneerselvam, A.C, Ld. A.R appearing on behalf of appellant-Revenue submits that invocation of Section 80 by learned Commissioner (Appeals) for setting aside penalties is not proper as the respondent failed to prove their bonafides with reasonable cause of not paying service tax in time. Respondent was registered with the department for the services provided to foreign companies only in 2009 wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2.2009. The delay in payment of tax was not intentional but due to pendency of the tax dispute before Hon'ble Bombay High Court which was ultimately settled only on 11.12.2008 as reported in the case of Indian National Shiponwers Association Vs UOI - 2009 (13) STR 235 (Bom.). Therefore, there is reasonable cause shown as rightly recorded by ld. Commissioner (Appeals) at para 5.3. She also submits that there being revenue-neutrality involved in the case, even if they had paid service tax despite the issue being debated at that relevant point of time, they would have got proportionate credit. On the issue of revenue-neutrality, she relied on the following decisions :- (1) Jain Irrigation Systems Ltd. Vs CCE Nashi-2015-TIOL-1674-CEST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used the records. In this appeal, there is no dispute on the tax liability which stands discharged by the respondent along with interest. The only surviving issue is on penalty imposed on the respondent under Section 77 78. On perusal of records, I find that there is no dispute that SCN dt. 30.1.2009 was served on the appellant on 09.02.2009 and the appellant discharged their entire tax liability along with interest on 05.02.2009. The claim of the appellant is that they duly discharged their tax liability on 05.02.2009 that is much before receipt of SCN. I find that penalty in the instant case is unsustainble for the reason that the delay in the payment of tax was unintentional and there were a lot of disputes as to whether tax was payabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtend to non imposition of penalty. Penalty under Section 78 of the Finance Act, 1994 as it stood during relevant period reads as under: SECTION 78. Penalty for suppressing value of taxable service Where any service tax has not been levied or paid, or has been short-levied 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 any of the provisions of this Chapter or of the rules made thereunder with the intent to evade payment of service tax, the person, liable to pay such service or erroneous refund, as determined under sub-section (2) of section 73, shall also be liable to pay a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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