Cum-tax valuation allowed for recomputation where tax was not separately collected, but the remaining penalty challenge failed.

Where service tax was not separately collected, the receipts were treated as cum-tax value for limited recomputation of tax, interest and consequential penalty. The matter was remanded to the original authority for that restricted exercise. The challenge to the penalty sustained by the lower appellate authority was rejected, and the reduced penalty issue under Section 78 was not pressed. The document thus records only partial relief on valuation, with the remaining penalty challenge failing.

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Issues: (i) Whether the amount realised had to be treated as cum-tax value for recomputation of tax, interest and penalty. (ii) Whether the penalty sustained by the lower appellate authority was liable to be interfered with.

Issue (i): Whether the amount realised had to be treated as cum-tax value for recomputation of tax, interest and penalty.

Analysis: The assessee sought consideration of the receipts as cum-tax value on the footing that service tax had not been separately collected during the relevant period. The departmental representative did not oppose such treatment in the facts of the case.

Conclusion: The claim for cum-tax assessment was allowed and the matter was remanded to the original authority for limited recomputation of tax, interest, and the 25% penalty amount.

Issue (ii): Whether the penalty sustained by the lower appellate authority was liable to be interfered with.

Analysis: The appeal was not pressed in relation to the reduced penalty imposed under Section 78, and the remaining penalty sustained by the lower appellate authority was not accepted for interference.

Conclusion: The challenge to the penalty sustained by the lower appellate authority was rejected.

Final Conclusion: The assessee obtained only limited relief on the cum-tax valuation issue, while the penalty challenge failed, resulting in a partly allowed appeal with remand for recomputation.

Ratio Decidendi: Where the receipts are not shown to have been collected separately as service tax, cum-tax treatment may be granted for the limited purpose of recomputing tax, interest, and consequential penalty.

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