2007 (6) TMI 216 - AT - Service Tax

Appellate Tribunal overturns penalty in service tax case, upholding Commissioner (Appeals) decision.

The Appellate Tribunal CESTAT Ahmedabad ruled in favor of the appellant, setting aside the enhanced penalty imposed by the Commissioner and allowing the ... Enhancement of penalty - penalty under Section 76 of the Finance Act, 1994 - penalty equivalent to tax demand - set aside of demand and penalty by Commissioner (Appeals) - grant of interim stayEnhancement of penalty - set aside of demand and penalty by Commissioner (Appeals) - grant of interim stay - Whether the enhanced penalty imposed by the Commissioner was tenable in view of the Commissioner (Appeals) having set aside the demand and penalty, and whether interim relief should be granted. - HELD THAT: - The Assistant Commissioner confirmed service tax duty and imposed penalty equal to the duty; subsequently the Commissioner enhanced the penalty under Section 76 to an amount equivalent to the tax demand. The appellants had earlier appealed to the Commissioner (Appeals), who by order dated 28th July, 2005 set aside both the demand of duty and the imposition of penalty. Given that the appellate authority has annulled the underlying demand and penalty, the enhancement of penalty by the Commissioner lacked justification. On that basis the Tribunal found it appropriate to grant interim relief and stay the impugned enhancement pending resolution of the appeal. [Paras 2, 3]Stay petition allowed and interim stay granted in view of the Commissioner (Appeals) having set aside the demand and penalty, rendering the enhancement unjustifiable.Final Conclusion: The Tribunal granted interim relief by staying the Commissioner's order enhancing the penalty, because the Commissioner (Appeals) had earlier set aside the demand and penalty, making the enhancement untenable pending final adjudication. The Appellate Tribunal CESTAT Ahmedabad ruled in favor of the appellant in a case involving service tax duty and penalties. The Commissioner had enhanced the penalty from Rs. 1,67,400 to Rs. 21,93,742, equivalent to the tax amount, which was appealed against. The Commissioner (Appeals) had earlier set aside the duty demand and penalty imposition. The Tribunal agreed with the appellant and allowed the stay petition.