2008 (11) TMI 198 - AT - Service Tax

Tribunal rules penalties for service tax liability unjustified, upholds Commissioner's decision.

The Tribunal upheld the Commissioner (Appeals) decision to set aside the penalty under section 76 of the Finance Act, 1994, for alleged failure to ... Rent-a-cab service – demand of service tax and penalty – penalties under section 76 and 78 simultaneously – department contended that the incidence of imposition of penalty under sections 76 and 78 of the Act are distinct and separate under the two provisions and even if offences are committed in the course of the same prosecution or arise out of the same Act, penalty can imposable for both the offences under both the sections separately – held that revenue filed this appeal on the ground as to whether penalty is simultaneously imposable under both the sections 76 and 78 of the Act. The revenue has not challenged the other ground insofar as to whether the proposal to impose penalty under section 76 of the Act by corrigendum to show-cause notice is permissible under the law – Order of Commissioner (Appeals) setting aside the penalty under section 76 upheld. Issues:1. Imposition of penalty under sections 76 and 78 of the Finance Act, 1994.2. Simultaneous imposition of penalties under both sections.3. Validity of imposing penalty under section 76 after penalty under section 78.4. Sustainability of the Commissioner (Appeals) order.Analysis:Issue 1: Imposition of penalty under sections 76 and 78 of the Finance Act, 1994The case involved the respondents providing 'Rent-a-Cab' services under the Finance Act, 1994, with an alleged failure to discharge the service tax liability. A show-cause notice was issued proposing tax demand and penalties under sections 76 and 78 of the Act. The Adjudicating Authority confirmed the tax demand and imposed penalties. The Commissioner (Appeals) set aside the penalty under section 76, leading to the revenue filing an appeal challenging this decision.Issue 2: Simultaneous imposition of penalties under both sectionsThe learned DR argued that penalties under sections 76 and 78 are distinct and separate, allowing for separate penalties for offenses arising from the same Act. Citing a decision by the Kerala High Court, the DR contended that penalties under both sections can be imposed independently, even in the same prosecution.Issue 3: Validity of imposing penalty under section 76 after penalty under section 78The respondents' advocate argued against imposing penalty under section 76 after penalty under section 78, citing Tribunal decisions supporting this view. The Commissioner (Appeals) had set aside the penalty under section 76 based on specific grounds, including the inadmissibility of double penalties under sections 76 and 78 for the same offense.Issue 4: Sustainability of the Commissioner (Appeals) orderAfter considering arguments from both sides and reviewing the case record, the Tribunal found that the respondents had fulfilled their tax liability along with penalties under section 78. The Tribunal upheld the Commissioner (Appeals) decision to set aside the penalty under section 76, citing precedents and legal principles. The Tribunal concluded that the appeal by the revenue challenging the penalties was not sustainable, as the other findings of the Commissioner (Appeals) were not disputed.In summary, the Tribunal rejected the revenue's appeal, affirming the Commissioner (Appeals) order and emphasizing that the simultaneous imposition of penalties under sections 76 and 78 was not warranted in this case.