2009 (6) TMI 62 - AT - Service Tax

Appellate authority confirms demand, interest, modifies penalties under Finance Act; Tribunal upholds reduced penalties.

The appellate authority confirmed the demand and interest but modified penalties imposed by the adjudicating authority under sections 73, 75, 76, and 78 ... Penalty – Waiver of penalty under section 80 - GTA Service – abatement to 75% - originally penalty of Rs. 50,000 was imposed and in the second round of litigation, the appellant cannot be put to a heavier burden than what was originally done in view of the fact that they had gone in appeal right up to the Tribunal and the matter went back for de novo adjudication – application of provisions of section 80 by the commissioner is correct and upheld. Issues:1. Eligibility for exemption Notification No. 32/2004-ST.2. Non-availment of Cenvat credit by Goods Transport Agency.3. Confirmation of demand, interest, and penalties.4. Appeal against Order-in-Appeal No. 77/2007/COMMR(a)/Raj.5. Disposal of appeal by Tribunal and remand for de novo consideration.6. Re-examination of the issue by the adjudicating authority.7. Appeal before the appellate authority.8. Decision on confirmation of demand, interest, and penalties by appellate authority.9. Appeal by revenue against the appellate authority's decision.10. Imposition of penalties under sections 76 and 78 of the Finance Act, 1994.Analysis:1. The case involved the eligibility of the assessee for exemption under Notification No. 32/2004-ST for availing abatement on service tax. The show-cause notice was issued due to the failure of the assessee to obtain a declaration from Goods Transport Agencies regarding non-availment of Cenvat credit, leading to a demand of Rs. 2,48,004.2. The adjudicating authority confirmed the demand, interest, and imposed penalties under sections 73, 75, 76, and 78 of the Finance Act, 1994. The appellate authority upheld this decision, leading to an appeal before the Tribunal.3. The Tribunal remanded the matter to the original authority for de novo consideration, directing the assessee to produce evidence to fulfill the conditions of the notification. The adjudicating authority, upon re-examination, confirmed the service tax demand, interest, and penalties due to the lack of adequate declarations from Goods Transport Agencies.4. The appellate authority upheld the confirmation of demand and interest but modified the penalties imposed by the adjudicating authority. The revenue appealed against this decision, arguing for the imposition of the minimum prescribed penalty under section 76.5. The Commissioner's discretion under section 80 was questioned, specifically regarding the reduction of penalties. The Commissioner's decision to reduce penalties was supported by the fact that the assessee had paid taxes and interest before the show-cause notice, obtained declarations in many cases, and had no mala fide intention to evade payment.6. The Commissioner's application of section 80 was found to be correct by the Tribunal, leading to the rejection of the revenue's appeal. The Tribunal emphasized that the penalties imposed were appropriate given the circumstances and the actions of the assessee throughout the litigation process.