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TMI Blog2020 (11) TMI 581X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty is imposable under Section 76, is clarificatory in nature, have got retrospective effect, as held by Member (Judicial) or whether the aforementioned amendment is not retrospective but prospective and hence the simultaneous penalties can be imposed for the period prior to 10.5.2008 as held by Member (Technical). (3) As held by Member (Judicial) in view of Section 80 of the Finance Act, 1994, dropping of penalty under Section 76 by the adjudicating authority is not questionable or as held by Member (Technical), the penalty under Section 76 dropped by the adjudicating authority should have been imposed? (4) As held by Member (Judicial) that the ruling of Kerala High Court in the case of ACCE Vs. Krishna Poduwal [2005 (10) TMI 279 - KERALA HIGH COURT] is not applicable in the present case as that ruling is prior to the amendment dated 10.5.2008 in Section 78 or as held by Member (Technical) that the aforementioned ruling is applicable and simultaneous penalty under Section 76 and 78 are imposable? Registry is directed to put up the appeal record before Hon ble President for nomination of 3rd Member to consider the aforementioned questions and difference of opinion for his opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereas S. 78 relates to penalty for suppression of the value of taxable service. Of course these two offences may arise in the course of the same transaction, or from the same act of the person concerned. But we are of opinion that the incidents of imposition of penalty are distinct and separate and even if the offences are committed in the course of same transaction or arises out of the same act, the penalty is imposable for ingredients of both the offences. There can be a situation where even without suppressing value of taxable service, the person liable to pay service tax fails to pay. Therefore, penalty can certainly be imposed on erring persons under both the above Sections, especially since the ingredients of the two offences are distinct and separate. Perhaps invoking powers under S. 80 of the Finance Act, the appropriate authority could have decided not to impose penalty on the assessee if the assessee proved that there was reasonable cause for the said failure in respect of one or both of the offences. However, no circumstances are either pleaded or proved for invocation of the said Section also. In any event we are not satisfied that an assessee who is guilty of suppressi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... day during which such failure continues or at the rate of two percent of such tax, per month, whichever is higher, starting with the first day after the due date till the date of actual payment of the outstanding amount of service tax: Provided that the total amount of the penalty payable in terms of this section shall not exceed the service tax payable." "78. Penalty for suppressing value of taxable service 78. (1) Where any service tax has not been levied or paid, or has been short-levied or short-paid, or erroneously refunded, by reason of fraud or collusion or wilful mis-statement or suppression of facts or 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 tax or erroneous refund, as determined under sub-section (2) of section 73 shall also be liable to pay a penalty, in addition to such service tax and interest thereon, if any, payable by him which shall not be less than, but which shall not exceed twice, the amount of service tax so not levied or paid or short levied or short paid or erroneously refunded: "Provided that where such service tax as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonable cause for the said failure." 8. As far as my appreciation on the plain reading of Section 76 and 78, I find that: (i) Time limit for issue of show cause notice from the relevant date is 18 months or normal period for Section 76 whereas extended period of limitation of five years is available for Section 78; (ii) Section 76 provides for imposition of penalty where an assessee liable to pay tax in accordance with Section 68 or the rules made there under fails to pay such tax. Section 68 provides that every person providing taxable service shall pay service tax at the rate specified in such manner and within such period as may be prescribed. Whereas Section 78 provides for penalty where any service tax has not been paid or levied or short paid etc by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of the Act or the rules made there under, with intent to evade payment of service tax. Thus Section 76 provides for failure to pay tax in normal circumstances as required under Section 68 read with the Service Tax Rules as to timely payment of tax, whereas Section 78 provides for penalty for fraud etc. wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o force with effect from 10 May, 2008, whereby Parliament has made legal position clear by introducing proviso to Section 78, which reads as under : " provided also that if the penalty is payable in this Section (Section 78), the provisions of Section 76 shall not apply." The Karnataka High Court further observed that while imposing penalty under Section 76, the question of imposing penalty under Section 78 also will not arise, because Section 76 applies to a case where the person has not either registered himself under the Act or having registered himself has not filed the return and not paid tax for the activity which he is carrying on. In such circumstances, the question of finding fault with the returns which are containing inaccurate particulars or suppression or concealment of value of taxable service would not arise. The amendment brought in Section 78 with effect from 10.5.2008 is only clarificatory nature. That was the position even before the amendment, as is evident from the express provisions of Section 76 and 78 ibid. 11. Similar view was taken by Punjab & Haryana High Court in CCE, First Flight Courier - 2011 (22) STR 622 (P&H) wherein the High Court held that imposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n be imposed simultaneously as held by Member (Technical). (2) Whether the amendment brought in Section 78 by Finance Act, 2008 by addition of proviso (w.e.f. 10.5.2008) providing that where penalty is imposed under Section 78 no penalty is imposable under Section 76, is clarificatory in nature, have got retrospective effect, as held by Member (Judicial) or whether the aforementioned amendment is not retrospective but prospective and hence the simultaneous penalties can be imposed for the period prior to 10.5.2008 as held by Member (Technical). (3) As held by Member (Judicial) in view of Section 80 of the Finance Act, 1994, dropping of penalty under Section 76 by the adjudicating authority is not questionable or as held by Member (Technical), the penalty under Section 76 dropped by the adjudicating authority should have been imposed? (4) As held by Member (Judicial) that the ruling of Kerala High Court in the case of ACCE Vs. Krishna Poduwal (supra) is not applicable in the present case as that ruling is prior to the amendment dated 10.5.2008 in Section 78 or as held by Member (Technical) that the aforementioned ruling is applicable and simultaneous penalty under Section 76 a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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