2019 (1) TMI 76 - HC - Service Tax

Court Upholds Penalty Deletion Decision under Finance Act, 1994

The Commissioner of Central Excise & Service Tax, Coimbatore Versus M/s. Ganga Medical Centre and Hospitals (P) Ltd., Coimbatore

The Court upheld the Tribunal's decision to delete the penalty imposed under Sections 77 and 78 of the Finance Act, 1994, invoking Section 80. The matter ... Deletion of Penalty u/s 77 and 78 - the issue on merits as well as the issue of limitation itself are remanded to the Adjudicating Authority for fresh decision - 'sufficient cause' for invoking Section 80 - Held that:- In the instant case, the Tribunal remanded the matter to the Adjudicating Authority. The Revenue is not aggrieved by such remand order, but is only aggrieved by that portion of the order deleting the penalty. It is not clear as to whether the assessee filed any appeal as against the direction issued by the Tribunal remanding the matter for de novo consideration. In any event, we are not adjudicating the correctness of such a direction and this order is confined only to the challenge only in respect of that portion of the order of the Tribunal deleting the penalty. The issue was an interpretational one and the services were taxable only for a limited period. The assessee also remitted the service tax collected from the insurance company - the Tribunal is right in deleting the penalty as being unwarranted. Appeal dismissed - decided against Revenue. Issues:1. Setting aside of penalty by the Tribunal under Sections 77 and 78 of the Finance Act, 1994 invoking Section 80.2. Consideration of penalty waiver under Section 80 of the Finance Act by the Tribunal.3. Remand of the matter to the Adjudicating Authority by the Tribunal for re-consideration of taxable services and penalty imposition.Analysis:1. The appeal raised substantial questions of law regarding the Tribunal's decision to set aside the penalty imposed by the Adjudicating Authority under Sections 77 and 78 of the Finance Act, 1994, by invoking Section 80. The Tribunal remanded the issue to the Adjudicating Authority for fresh consideration on merits and limitation, questioning the justification of waiving the penalty under Section 80.2. The primary issue for consideration was whether the Tribunal had the authority to set aside the penalty while remanding the matter to the Adjudicating Authority to determine the taxability of services. The Revenue argued that the penalty should not have been waived as the Tribunal had remanded the entire issue for de novo consideration, leaving the penalty determination open for the Adjudicating Authority.3. The Tribunal justified its decision to delete the penalty by citing the interpretational nature of the issue, confusion regarding taxable services under a government scheme, and the assessee's payment of service tax collected from the insurance company. The Tribunal found the penalty unwarranted and invoked Section 80 of the Finance Act, leading to the penalty's deletion.4. In a similar case involving M/s.Arvinth Hospitals, the Court remanded the matter to the Adjudicating Authority for a holistic view on the transaction's scope and beneficiary details. The Tribunal's remand in the present case was not disputed by the Revenue, focusing solely on the penalty deletion aspect. The Court upheld the Tribunal's decision to delete the penalty based on the factual circumstances, concluding that no substantial question of law arose.5. The Court dismissed the civil miscellaneous appeal, clarifying that the order's scope was limited to challenging the penalty deletion by the Tribunal. The correctness of the Tribunal's remand order for de novo consideration was not addressed in this judgment, emphasizing the deletion of the penalty as the sole issue under review.