2012 (8) TMI 786 - AT - Service Tax

Appellate Tribunal rules penalty under Section 76 unsustainable; upholds service tax demand and penalties.

The Appellate Tribunal CESTAT, Ahmedabad considered the issue of penalty under Section 76 of the Finance Act, 1994. The appellant's penalty under Section ... Penalty under Section 76 of the Finance Act, 1994 - concurrent imposition of penalties under Section 76 and Section 78 - payment of service tax and interest after departmental detection - penalty under Section 78 of the Finance Act, 1994 - penalty under Section 77 of the Finance Act, 1994 - confirmation of demand and interestPenalty under Section 76 of the Finance Act, 1994 - concurrent imposition of penalties under Section 76 and Section 78 - payment of service tax and interest after departmental detection - Penalty under Section 76 of the Finance Act, 1994 is not sustainable and is waived. - HELD THAT: - The appellant admitted that the service tax liability for the period 2004 - 2005 to 2007-2008 was correctly determined by the department and that service tax along with interest was paid once the departmental verification pointed out the shortfall. The appellant had also discharged penalty to the extent of 25% under Section 78 in accordance with law and did not contest penalty under Section 77. Having regard to these facts and following Tribunal precedents holding that imposition of penalties under Section 76 and Section 78 need not follow in all cases for periods prior to 10.5.2008, the Tribunal considered it appropriate to hold that the penalty imposed under Section 76 was not sustainable in the facts of this case and therefore waived.Penalty under Section 76 is quashed/waived.Penalty under Section 78 of the Finance Act, 1994 - penalty under Section 77 of the Finance Act, 1994 - confirmation of demand and interest - The demand for service tax, interest, penalty under Section 77 and the penalty under Section 78 already paid are confirmed as not contested. - HELD THAT: - The appellant expressly did not contest the demand for service tax, liability for interest, and the penalty under Section 77. The penalty under Section 78 had been paid to the extent of 25% as per law. In view of the appellant's concessions and payments, the Tribunal confirmed the demand, interest, and the penalties which were not contested.Demand for service tax, interest, penalty under Section 77, and penalty deposited under Section 78 are confirmed as not contested.Final Conclusion: On the facts that the service tax and interest were paid after departmental detection, the Section 78 penalty was discharged and Section 77 was not contested, the Tribunal waived the penalty under Section 76 but confirmed the demand, interest and the penalties which the appellant did not contest. Issues:- Whether penalty is leviable under Section 76 of the Finance Act, 1994.Analysis:1. The Appellate Tribunal CESTAT, Ahmedabad considered the issue of penalty under Section 76 of the Finance Act, 1994. The appellant, engaged in providing Business Auxiliary Service and Erection, Commissioning, and Installation Service, was found to have not assessed the service tax correctly for the period from 2004-2005 to 2007-2008, resulting in a liability of Rs. 84,261. The appellant admitted the service tax liability and paid the amount with interest after it was pointed out by the department. Additionally, a penalty of 25% under Section 78 was also paid. The appellant did not contest the penalty under Section 77 but sought a waiver of the penalty under Section 76, arguing that it was not imposable based on the circumstances of the case and citing relevant tribunal decisions.2. The Tribunal reviewed the submissions and noted that previous decisions indicated that penalties under Section 76 and Section 78 need not be imposed together in all cases, even for periods prior to 2008. Considering that the appellant promptly paid the service tax, interest, and the penalty under Section 78 as required by law, and did not contest the penalty under Section 77, the Tribunal found the penalty under Section 76 to be unsustainable in this case. Therefore, the Tribunal confirmed the demand for service tax, penalty under Section 77, interest on service tax, and the penalty already deposited under Section 78 of the Finance Act, 1994, as they were not contested by the appellant.