Tribunal limits penalty, allows reduced penalty payment.

The Tribunal limited the penalty under Section 77 (1) (a) to Rs. 10,000 and allowed the appellant's entitlement to a reduced penalty of 25% under Section 78, which had already been paid. The appeal was partly allowed on these grounds.

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Issues Involved:
1. Penalty imposed under Section 77 (1) (a) of the Finance Act,1994 for failure to take service tax registration.
2. Equivalent penalty under Section 78 of the Finance Act,1994.

Analysis:

Issue 1: Penalty under Section 77 (1) (a) for failure to take registration:
The appellant argued that the penalty imposed by the adjudicating authority was incorrect as it invoked the pre-amended Section 77 (1) (a), which prescribed a penalty of Rs. 200 per day till the payment of tax. However, the appellant contended that the amended Section 77 (1) (a) from 10.5.2013 set the maximum penalty at Rs. 10,000. The Tribunal held that the penalty should be restricted to Rs. 10,000 as per the amended Section 77 (1) (a) applicable to the case, overturning the lower authorities' decisions based on the pre-amended provision.

Issue 2: Penalty under Section 78 and entitlement to reduced penalty:
Regarding the penalty under Section 78, the appellant claimed entitlement to a reduced penalty of 25% if paid within 30 days from the communication of the order-in-original. The appellant received the order on 6.6.2014, and paid the entire service tax, interest, and reduced penalty on 7.7.2014, which was the next working day after the 30th day. The Tribunal found that the appellant complied with the provisions of Section 78 by paying within the stipulated period, and thus, was eligible for the reduced penalty as per the second proviso of Section 78. The Tribunal set aside the equivalent penalty imposed by the lower appellate authority and restricted the penalty to 25%, which had already been paid by the appellant.

In conclusion, the Tribunal ruled that the penalty under Section 77 (1) (a) should be limited to Rs. 10,000 and the appellant was entitled to the reduced penalty of 25% under Section 78, which had already been paid. Therefore, the appeal was partly allowed based on the above terms.

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