2007 (11) TMI 28 - AT - Service Tax

Appellate Tribunal overturns penalty hike by Central Excise, citing Finance Act discretion

The Appellate Tribunal CESTAT, Mumbai set aside the penalty enhancement imposed by the Commissioner of Central Excise on the appellants, citing discretion ... Discretion in quantum of penalty under Section 76 of the Finance Act, 1994 - minimum penalty per day for delay in payment of service tax - enhancement of penalty without reasonsDiscretion in quantum of penalty under Section 76 of the Finance Act, 1994 - enhancement of penalty without reasons - Validity of the Commissioner's enhancement of the penalty imposed under Section 76 of the Finance Act, 1994. - HELD THAT: - The Tribunal held that the Commissioner's enhancement was unsustainable because he relied solely on the literal statutory minimum (the per day minimum penalty for delay in payment of service tax) and did not articulate any reasons for departing from the lesser penalty imposed by the Assistant Commissioner. The Tribunal noted binding decisions of the Hon'ble Bombay High Court that authorities possess a discretion in fixing the quantum of penalty under Section 76 and may impose a penalty lower than the statutory minimum where circumstances warrant. In the present case the Assistant Commissioner had recorded reasons for imposing a nominal penalty, whereas the Commissioner offered no reasoning to justify enhancement. On that basis the enhancement was set aside.Enhancement of the penalty by the Commissioner set aside; appeal allowed.Final Conclusion: The Commissioner's order enhancing the penalty was quashed for want of reasons and in view of the recognized discretion to impose a lesser penalty under Section 76; the appeal is allowed. The Appellate Tribunal CESTAT, Mumbai set aside the penalty enhancement imposed by the Commissioner of Central Excise on the appellants, citing discretion in penalty quantum under Section 76 of the Finance Act, 1994. The Tribunal found the enhancement not sustainable and allowed the appeal.