Penalty under service tax law remanded for fresh consideration after amendment-related liability and hearing defects were raised.

Penalties under Sections 76 and 77 of the Finance Act were examined in light of the 16.6.2005 amendment replacing "commercial concern" with "any person". The dispute related to late filing of returns and late payment of service tax for the period April 2005 to September 2005, and whether default could be treated as established for the pre-amendment period. As the lower authority had not considered this aspect and the appellant had not been given a proper opportunity to explain the position, the penalty order was set aside and the matter was remanded for fresh decision on penalty after hearing the appellant.

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Issues: Whether the penalties imposed under Sections 76 and 77 of the Finance Act were sustainable for the period prior to 16.6.2005, when the service definition was amended, and whether the matter required reconsideration by the adjudicating authority.

Analysis: The appellant's liability was linked to the amendment by which the expression "commercial concern" was replaced by "any person" with effect from 16.6.2005. The dispute concerned the period April 2005 to September 2005, and the question whether late filing of returns and late payment of service tax could be treated as default for the period before the amendment required fresh examination. The lower authority had not considered this aspect and the appellant was not given a proper opportunity to explain the position.

Conclusion: The penalty order was set aside and the matter was remanded to the adjudicating authority for fresh decision on penalty after affording an opportunity of hearing to the appellant.

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