Supreme Court upholds service tax demand, stays penalty recovery pending appeal, grants 4 weeks for payment.

The Supreme Court upheld the confirmation of demand for service tax and cess by the Tribunal, including interest on air tickets sold before and after a specific date. The Court rejected the appellant's plea for staying the demand of service tax but stayed the recovery of penalty amounting to Rs. 16.75 Cr. until the appeal's final disposal, considering the appellant had paid the penalty under Section 78 and lacked fraudulent intent. The appellant was granted four weeks to deposit the remaining Rs. 7 Cr. towards service tax for expedited resolution of the appeal.

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Issues:
1. Confirmation of demand of service tax and cess by the Tribunal
2. Confirmation of demand of service tax and cess with interest by the Commissioner
3. Imposition of penalty under Section 76 of the Finance Act 1994
4. Imposition of penalty under Section 78 of the Finance Act 1994
5. Stay of demand of service tax
6. Stay of penalty amount under Section 76
7. Payment of remaining service tax amount

Analysis:

1. The Supreme Court addressed the appellant's grievance against the Customs, Excise and Service Tax Appellate Tribunal's order confirming the demand of service tax and cess by the Commissioner. The Tribunal upheld the confirmation of demand related to service tax and cess, including interest, concerning air tickets sold before and after a specific date.

2. The Court admitted the Civil Appeal and considered an application for stay issued on the same day. The appellant was informed of the substantial payment required towards service tax and penalty as per the impugned order.

3. The appellant, through senior counsel Mr. S. Ganesh, mentioned that a portion of the service tax liability had already been deposited, while the total amount was significant. After hearing both parties, the Court rejected the prayer for staying the demand of service tax.

4. In terms of penalties under Sections 76 and 78 of the Finance Act 1994, the Court noted that the appellant had paid the penalty imposed under Section 78. The revenue admitted that if a penalty was payable under Section 78, it could not be imposed under Section 76. Additionally, the original order did not find the appellant guilty of fraud or intent to evade service tax payment.

5. Considering the above aspects, the Court decided to stay the recovery of the penalty amounting to Rs. 16.75 Cr. until the final disposal of the appeal, as the appellant had already paid the penalty under Section 78 and had no fraudulent intent.

6. The appellant requested four weeks to deposit the remaining Rs. 7 Cr. towards service tax, which was granted by the Court. Consequently, the Court disposed of the relevant application and expedited the hearing of the appeal for a prompt resolution.

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