2015 (10) TMI 2094 - AT - Service Tax

Court Rejects Commissioner's Appeal, Upholds Finance Act Benefit for Respondent in Penalty Case

Commissioner of Central Excise, Customs and Service Tax Versus M. Madhusudhan

The judgment favored the respondent, Mr. M. Madhusudhan, Proprietor, Manasaa Contractor, by upholding the benefit of Section 80 of the Finance Act. The ... Penalty u/s 76, 77 & 78 - benefit of Section 80 - Held that:- Bonafides of the respondent are not in doubt. Had he been informed and known about the law, he was always willing to pay the liability of service tax; as soon as he came to know about his liability, he made the payment. The facts on records go in favour of the respondents and this is a situation where provisions of Section 80 of Finance Act 1994 would be applicable. There is no proper justification and substance in the appeal of the appellant. Therefore, the appeal is hereby rejected - Decided against Revenue. Issues:1. Benefit of Section 80 of the Finance Act to the assessee.2. Appeal against the order of Commissioner (Appeals) regarding penalty imposition.3. Argument for penalty imposition by the Department.4. Examination of bonafides of the respondent.Analysis:1. The judgment revolves around the provision of giving the benefit of Section 80 of the Finance Act to the assessee, Mr. M. Madhusudhan, Proprietor, Manasaa Contractor. Section 80 states that no penalty shall be imposable on the assessee for any failure if reasonable cause is proven. The respondent had been given the benefit of this provision by the Commissioner (Appeals), withdrawing the earlier-imposed penalty.2. The Commissioner of Central Excise, Customs & Service Tax Hyderabad-I appealed against the order of the Commissioner (Appeals), arguing that penalties should be imposed again and recovered from the respondent. The Department contested the order-in-appeal, emphasizing the imposition of penalties despite the respondent's alleged lack of understanding of English and statutory provisions.3. During the proceedings, the Commissioner learned (A.R.) argued for penalty imposition, stating that the respondent, being semi-literate and only proficient in Telugu, was ignorant of the statutory provisions. However, upon examination of the facts, it was found that the bonafides of the respondent were not in doubt. The respondent displayed willingness to pay the service tax liability as soon as informed, indicating a lack of deliberate non-compliance.4. The presiding member, after evaluating the facts, concluded that the respondent's bonafides were evident. The respondent's prompt payment upon becoming aware of the liability, coupled with the lack of justification in the Department's appeal, led to the rejection of the appeal. The judgment highlighted the application of Section 80 of the Finance Act 1994 in favor of the respondent, ultimately disposing of the matter in favor of the respondent.