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of <h1>Tribunal overturns penalties for service tax violation, citing lack of sustainable demand.</h1> <h3>M/s Jay Cee Motors Versus CCE, Ludhiana</h3> M/s Jay Cee Motors Versus CCE, Ludhiana - 2017 (7) G. S. T. L. 209 (Tri. - Chan.) Issues:Appeal against order allowing penalty under Section 76 and 78 of the Finance Act, 1994. Imposition of penalty under Section 76. Challenge of demand of service tax on handling charges. Appellant's contention against penalty. Interpretation of penalty provisions.Analysis:The appellant appealed against the order allowing the penalty under Section 76 and 78 of the Finance Act, 1994. The case involved the appellant, who operated an Authorized Service Station and was found to have charged handling charges from clients without paying service tax. The adjudicating authority confirmed the demand for service tax on handling charges, along with interest, and imposed penalties under Section 78. The Revenue appealed, arguing that penalties under Section 76 were not imposed. The appellant also challenged the penalty under Section 76, as Section 78 penalty had already been imposed. The Commissioner (A) upheld the penalty under Section 76, leading to the current appeal.The appellant contended that since they challenged the order confirming the demand of service tax, the appeal should be heard on merits. However, the Tribunal found that the demand confirmation was not challenged before the Commissioner (A) and had attained finality. The appellant's argument that penalties were not sustainable due to the merit of the demand was considered. The Revenue cited a High Court case supporting the imposition of penalties under Section 76 and 78.The Tribunal considered whether penalties could be imposed if the demand was not sustainable. It held that if the demand was not sustainable, no penalties could be imposed. Relying on precedent, the Tribunal found that the demand against the appellant could not be confirmed. Therefore, penalties under Section 76 and 78 were set aside. The Tribunal referenced a previous case to support its decision. Consequently, the penalties imposed on the appellant were revoked, and the appeal was disposed of accordingly.
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