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of <h1>Tribunal waives penalty under Section 78 for Appellants acting in good faith. Interest upheld, penalty waived due to absence of mens rea.</h1> <h3>Sanghavi Land Developers Pvt Ltd. Versus CCGST, Mumbai East</h3> Sanghavi Land Developers Pvt Ltd. Versus CCGST, Mumbai East - TMI Issues:- Whether the Appellants are liable for penalty u/s. 78 of the Finance Act, 1994.Analysis:1. Background and Legal Framework:The appeal was filed against an order regarding the liability for penalty under section 78 of the Finance Act, 1994. The Appellants were engaged in construction and rental activities, with confusion arising due to amendments in service tax laws. The Hon'ble High Court upheld the constitutional validity of the amendments in 2012.2. Arguments and Submissions:The Appellant contended that they were not aware of the final court decision and promptly paid the service tax upon notification by the anti-evasion team. They argued that the confusion in the industry justified their non-payment initially. The department sought penalty under section 78.3. Judicial Precedents and Analysis:The Tribunal referred to a similar case where penalties were set aside due to a bona fide belief held by the appellants. The Tribunal noted the importance of mens rea for imposing penalties under section 78, as established by Supreme Court rulings.4. Decision and Rationale:Considering the facts, the Tribunal found that the Appellants acted in good faith and promptly paid the service tax upon notification. The Tribunal invoked Section 80 of the Finance Act, 1994, to waive the penalty under Section 78. The interest liability was upheld, but the penalty was waived based on the absence of intent to evade payment.5. Conclusion:The Tribunal, in line with legal principles and precedents, concluded that the Appellants' actions did not demonstrate an intention to evade payment. Therefore, the penalty under Section 78 was waived, and the appeal was disposed of accordingly.(Judgment delivered by Shri Ajay Sharma, Member (Judicial) on 21/02/2019)
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