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TMI Blog2024 (8) TMI 788X X X X Extracts X X X X X X X X Extracts X X X X ..... les with intent to evade payment of duty does involve in the present case. The demand u/s 73 (1) can be made only when there is no fraud, collusion, willful mis-statement, contravention of any provision or rules with intent to evade payment of duty, if these ingredients exist then the demand should be raised under proviso to Section 73 (1). For this reason also for demanding the service tax, proviso was not invoked. Therefore, different yardstick for imposing penalty under Section 78 cannot be adopted by the Revenue. The Learned Commissioner has rightly refrained from imposing penalty under Section 78. The respondent is not liable for penalty under Section 78, therefore, the order of the Learned Commissioner so far he refrained from imposing penalty under Section 78 of Finance Act, 1994 is correct and legal - the revenue s appeal is not maintainable. The Revenue s appeal is dismissed. - MR. RAMESH NAIR, MEMBER (JUDICIAL) AND MR. C.L. MAHAR, MEMBER (TECHNICAL) Shri Tara Prakash, Deputy Commissioner (AR) for the Appellant Shri Hardik Modh, Advocate for the Respondent ORDER This appeal is filed by the Revenue seeking imposition of penalty under Section 78 of the Finance Act, 1994 wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Counsel appearing on behalf of the Respondent at the outset submits that the demand in the present case has arisen as a recurring issue under recurring show cause notice and the demand is in normal period of one year therefore, there is no suppression of fact or any contravention. Hence, the penalty was rightly not imposed by the Adjudicating Authority. He further submits that in the show cause notice the penalties were proposed under Section 76 and 78 of the Finance Act, 1994. The penalty under Section 76 was imposed, it is now settled legal position that both the penalties under Section 76 and 78 cannot be imposed simultaneously, therefore, for this reason also the learned Commissioner has rightly refrained from imposing the penalty under section 78 of the Finance Act, 1994. In support he placed reliance on the following judgments :- Adani Gas Ltd - 2019 (28) GSTL 238 (Tri. Ahmd) Commissioner of Service Tax vs. Adani Gas Ltd - 2020 (40) GSTL 145 (SC) Raval Trading Company 2016 (42) STR 210 (Guj.) Commissioner of CGST vs. Sai Consulting Engineering Pvt Ltd -2018 (15) GSTL 708 (Guj.) Stollberg India Pvt Ltd 2017 (52) STR 327 (T) Remac Marketing Pvt Ltd - 2009 (13) STR 658 (T) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly refunded, by reason of fraud or collusion or wilful misstatement or suppression of facts or contravention of any of the provisions of Chapter 5 of the Finance Act or of the Rules made thereunder with the intent to evade payment of service tax. During the period in question, i.e., the period from 9-7-2004 to 31-3-2006, Section 78 of the Finance Act, 1994, did not contain a further proviso, which, as noted above, which added with effect from 16-5-2008. The further proviso reads as under : Further provided that if the penalties is payable under this section, the provisions of Section 76 shall not apply. 8 . Section 76 of the Finance Act, 1994, pertains to penalty for failure to pay service tax. As it stood at the relevant time this provision provided that any person who is liable to pay service tax in accordance with the provisions of Section 68 or the Rules made under Chapter 5, but fails to pay such tax, shall pay, in addition to such tax and the interest on that tax in accordance with the provisions of Section 75, a penalty which shall not be less than one hundred rupees for every day during which such failure continues or at the rate of one per cent of such tax, per month, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viso was in the nature of clarificatory amendment and not creating a liability for the first time. Even without the aid to this further proviso to Section 78, one entire plausible view was that the situation envisaged under Section 76 of the Finance Act, 1994, would exclude those cases covered under Section 78 of the Finance Act, 1994. In other words, Section 76 of the Finance Act, 1994, would cover only the cases of non-payment of service tax which are not related to fraud, collusion, wilful misstatement, suppression of facts or contravention of any of the provisions of the said Chapter or the rules made thereunder with the intent to evade payment of service tax since legislature had already provided for penalty in Section 78 in such situations. Thus further proviso to Section 78 made it explicit which was till then implicit. 12 . Section 76 of the Finance Act, 1994, as is now amended with effect from 14-5-2015 gives further credence to this argument. Section 76(1) as it stands after the said amendment provides that where service tax was not levied or not paid or having been short-levied or short-paid, or erroneously refunded for any reason, other than the reason of fraud or collu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng or not levying penalty under section 76 of the Act. In such situation, even if reasoning given by the appellate authority that if penalty under section 78 of the Act was imposed, penalty under section 76 of the Act could never be imposed may not be correct, the appellate authority was within its jurisdiction not to levy penalty under section 76 of the Act having regard to the fact that penalty equal to service tax had already been imposed under section 78 of the Act. This thinking was also in consonance with the amendment now incorporated though the said amendment may not have been applicable at the relevant time. 14 . The Karnataka High Court has also taken a similar view in the case of Commissioner of Service Tax, Bangalore v. Motor World [2012 (27) S.T.R. 225 (Kar.)] in which in paras 17, 18 and 19 it was observed as under : 17. This decision of the Tribunal has been affirmed by this Court in the case of CCE v. Sunitha Shetty reported in 2006 (3) S.T.R. 404 (Kar.) = 2004 (174) E.L.T. 313 (Kar.), which has been followed by this court in the case of Commissioner of Central Excise v. Royal Agencies in CEA No. 4 of 2004 disposed of on 26-2-2008. Similar views have been taken by v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere penalty for suppressing the value of taxable service under Section 78 is imposed, the penalty for failure to pay service tax under Section 76 shall not apply. With this amendment the legal position now is that simultaneous penalties under both Sections 76 and 78 of the Act would not be levied. However, since this amendment has come into force w.e.f. 16th May, 2008, it cannot have retrospective operation in the absence of any specific stipulation to this effect. Going by the nature of the amendment, it also cannot be said that this amendment is only clarificatory in nature. We may mention that Punjab and Haryana High Court in its decision dated 12th July, 2010 in STA 13/2010, entitled Commissioner of Central Excise v. M/s. Pannu Property Dealers, Ludhiana [2011 (24) S.T.R. 173 (P H) has taken the view that even if the scope of two sections of the Act may be different, the fact that penalty has been levied under Section 78 could be taken into account for levying or not levying penalty under Section 76 of the Act. However, that was a case where the appellate authority had exercised its discretion not to levy the penalty under Section 76 of the Act, when the larger penalty had alre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the service tax evaded. On the other hand, the penalty under Section 76 which could be imposed is at the fixed amount per day for the entire duration of the failure to deposit the tax which, in any case, would not exceed fifty percent of the service tax payable. 10. The tenor, background and the purpose for which the penalty could be imposed under Section 78 of the Finance Act, 1994, is entirely different than in case of Section 76 of the Finance Act, 1994. However, the language of Section 76 did not specifically exclude the situation; otherwise covered under Section 78 namely non-payment of tax on account of willful mis-statement, fraud or collusion etc. One plausible argument therefore could be that Section 76 would also cover such situations and permit the department to levy a further penalty for default as envisaged under Section 76 of the Act over and above the penalty imposed under Section 78 of the Finance Act, 1994. In order to clarify this position, a further proviso was introduced in Section 78 making it clear that, if the penalty is payable under Section 78, the provisions of Section 76 shall not apply. In other words, with the introduction of further proviso to Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contravention of any provision or rules with intent to evade payment of duty does involve in the present case. Moreover, in the show cause notice as well as in the impugned order, the demand was proposed/confirmed under Section 73 (1) of the Finance Act, 1994 which reads as under:- (73). Recovery of service tax not levied or paid or short levied or short-paid or erroneously refunded. (1) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the Central Excise officer may, within thirty months from the relevant date, serve notice on the person chargeable with the service tax which has not been levied or paid or which has been short-levied or short-paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: Provided that 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 provision of this Chapter or of the rules made thereunder with in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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