2012 (9) TMI 703 - AT - Service Tax

Appellant directed to allocate deposit, penalty under section 77 confirmed, waiver of pre-deposit granted.

The Tribunal directed the appellant to appropriate the deposited amount towards the undisputed service tax and a penalty of 25% of the service tax demand. ... Demand of service tax, interest and penalty - Service Tax demand of Rs. 10,83,975/-. During pendency of the appeal the appellant has already deposited Rs. 12,14,786 – Held that:- Once the appellate authority did not bring the questionable conduct of the appellant, amount deposited by the appellant shall be appropriated towards service tax, which remains undisputed all through and the balance shall be appropriated towards penalty to the extent of 25% of the service tax demand. Interest, if any, shall become payable. there shall be no levy of penalty under section 76 but penalty shall be payable under section 77 of the Finance Act, 1994. requirement of pre-deposit waived Issues: Service Tax Demand, Penalty Reduction, Appropriation of Deposited Amount, Penalty Sections, Pre-deposit RequirementService Tax Demand:The appellant faced a Service Tax demand of Rs. 10,83,975 following the first appellate order. The appellant had already deposited Rs. 12,14,786 during the appeal. The appellant sought a concession in penalty, proposing a reduction to 25% of the service tax demand to conclude the litigation. The Tribunal acknowledged the partial relief granted by the first appellate authority and examined the gravity of penal consequences in the case. The Tribunal directed the appropriation of the deposited amount towards the undisputed service tax and the balance towards a penalty of 25% of the service tax demand.Penalty Reduction:The Tribunal considered the appellant's request for a penalty reduction and found that the first appellate authority did not clearly highlight the questionable conduct of the appellant. As a result, the Tribunal decided to appropriate the deposited amount towards the service tax and impose a penalty of 25% of the service tax demand. The Tribunal clarified that no penalty would be levied under section 76 but confirmed the penalty under section 77 of the Finance Act, 1994.Appropriation of Deposited Amount:The Tribunal ordered the appropriation of the amount deposited by the appellant towards the undisputed service tax and a penalty of 25% of the service tax demand. The Tribunal addressed the appellant's concern regarding the direction of appropriation towards penalty under section 78 only and confirmed the penalty imposed under section 77, while waiving the pre-deposit requirement due to the appeal's disposition.Penalty Sections:The Tribunal clarified that no penalty would be imposed under section 76 but upheld the penalty under section 77 of the Finance Act, 1994. The Tribunal emphasized that the penalty under section 77 was rightly imposed and confirmed, ensuring that interest, if applicable, would become payable.Pre-deposit Requirement:Due to the Tribunal's decision and the manner in which the appeal was disposed, the requirement of pre-deposit was waived. The appeal and stay petition were both disposed of, partially allowing the appeal based on the Tribunal's findings and directions.