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TMI Blog2025 (3) TMI 781X X X X Extracts X X X X X X X X Extracts X X X X ..... d his lack of knowledge and status as petty contractor not having means to understand the complexity of taxation of services. Both the authority agreed to these submissions and have still gone on to impose penalties under Section 77 and 78 of the Finance Act, 1994. Undisputedly appellant is a petty contractor whose total turnover during the entire period of dispute i.e. from 16.06.2005 to 31.03.2010 was meager Rs 1,13,39,820/-. Taking note of undisputed findings with regards to status of appellant and his compliance/ intention to comply even before the adjudication/ appellate proceeding has been concluded there are no justification for not having considered extending the benefit of Section 80 of the Finance Act, 1994 and waiving of all the penalties imposable on the appellant. There are no merits in the impugned order to the extent it is in relation to the penalties imposed on the appellant. This is a fit case where penalties imposable under Section 77 and 78 should have been waived in terms of provisions of Section 80 of the Finance Act, 1994. Conclusion - i) The demand for service tax, as quantified by the adjudicating authority, is confirmed, but the penalties imposed are set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,420/- (Service Tax Rs.12,68,925/-+Education Cess Rs.25,379/- + Secondary & Higher Education Cess Rs.8,116/-) should not be demanded and recovered from them along with appropriate interest under the proviso to Section 73(1) of the Act r/w Section 75 of the Act. 2. Penalty should not be imposed upon them under the erstwhile Section 75A read with Section 77 of the Act for violation of Section 69 of the Act/ rule 4 of the Rules. 3. Penalty should not be imposed upon them under Section 77 of the Act for violation of Section 70 read with rule 7 of the Rules, in case of each default. 4. Penalty should not be imposed upon them under section 76 of the Act for violation Section 68 of the Act read with Rule 6 of the Rules. 5. Penalty should not be imposed upon them under Section 78 of the Act." 2.4 This show cause notice was adjudicated as per the Order-in-Original referred in para 1 above. Aggrieved appellant filed appeal before Commissioner (Appeals), which has been dismissed as per the impugned order. 2.5 Hence this appeal. 3.1 We have heard Shri Atul Gupta learned Counsel appearing for the appellant and Shri Santosh Kumar learned Authorized Representative appearing for the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011 and stated that they are willing to deposit the tax as per calculation chart. They were innocent and ready to pay the tax due upon them. They are regularly paying the service tax after obtaining the service tax registration and furnishing the returns to the department. Further, they pleaded that now being ready to pay the due tax upon them and being innocent, penalty may please be dropped." 4.3 After considering the submissions made, Original Authority has determined the tax due from the appellant to be less than the amount claimed to be payable by the appellant as per the calculation chart submitted by the appellant, and paid by them. Having noted so he went on to invoke the extended period of limitation, demanded interest and also imposed penalties under Section 77 and 78 of the Act. The order in original only shows non application of the mind by the adjudicating authority. It seems that adjudicating authority has recorded all the finding in the matter just to justify imposition of penalty. 4.4 In the impugned order, First Appellate Authority has observed as follows:- "3. Aggrieved with the aforesaid order the appellants have filed the present appeal on the following gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng full valve is ST-3 returns and they short paid service tax amounting to Rs.13,02,420/-. The thrust of the appes is that (1) PF contribution is not part of taxable value (2) while allowing deduction of service tax to the extent of Rs 1,11,108/- relating to (a) Rs.2,26,153/-claimed to be pertaining to non taxable services as provided prior to 16.6 2005 and (b) Rs.8,63,147/-as service tax paid by M/s Hindaico Indus. Ltd the service tax had been calculated at flat rate of 10.2% whereas, the amounts were received in different years having different rates of service tax. (3) entire exercise is revenue neutral as the said tax paid by the appellants, was admissible to Hindalco as credit of such tax and (4) the demand for interest and imposition of penalty was not sustainable as the services were not taxable (5) Extended period clause was not invokable. 7. I have gone through the facts of the case and the material available on record as also the submissions of the appellants with reference to the impugned Order-in-Original dated 27.07.2011. It is an admitted fact that the appellants did not contest the Show Cause Notice dated 11.10.2010 on merit before the adjudicating authority. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecovery of Rs 3,49,760/- as service tax short paid, against admitted short payment of Rs 4,30,056/-. However there is no challenge to the order of adjudicating authority by the revenue either before the Commissioner (Appeal) or before us. 4.7 Both the authorities below have misdirected themselves as there was no contest by the appellant to the invocation of the extended period or the demand of service tax. Appellant has suo motto computed the service tax due. He made the submission to this effect before the original authority and also before the appellate authority. He also pleaded his lack of knowledge and status as petty contractor not having means to understand the complexity of taxation of services. Both the authority agreed to these submissions and have still gone on to impose penalties under Section 77 and 78 of the Finance Act, 1994. Undisputedly appellant is a petty contractor whose total turnover during the entire period of dispute i.e. from 16.06.2005 to 31.03.2010 was meager Rs 1,13,39,820/-. Taking note of undisputed findings with regards to status of appellant and his compliance/ intention to comply even before the adjudication/ appellate proceeding has been conclude ..... X X X X Extracts X X X X X X X X Extracts X X X X
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