Tribunal rules in favor of appellant, deems penalties unjustifiable. Show cause notice time-barred.

KANDLA PORT TRUST Versus C.C.E. & KUTCH (GANDHIDHAM)

KANDLA PORT TRUST Versus C.C.E. & KUTCH (GANDHIDHAM) - TMI Issues involved:
The issues involved in the judgment are the demand of interest under Section 75 of Finance Act, 1994, imposition of penalty under Section 77 and Section 78, and the time-barred show cause notice for recovery of interest and penalties.

Demand of Interest and Penalties:
The appellant contested that service tax was not payable on leasing land due to unauthorized occupation by oil companies, and the bills raised were for compensation, not lease rent. The appellant argued that without a contract, service tax cannot be levied. The appellant also highlighted that the show cause notice for interest and penalties was issued after the normal period of 1 year, rendering it time-barred. The Tribunal found that the show cause notice did not demand service tax, and as the appellant paid the tax without protest, the Revenue did not demand it. The Tribunal held that the extended period for issuing the notice was not valid, making the penalties unsustainable.

Legal Precedent:
The Tribunal cited the case of Pushpam Pharmaceuticals Company vs. CCE, Bombay, to support the argument that the show cause notice being time-barred renders the impugned order unsustainable. The judgment emphasized that in taxation, suppression of facts must be deliberate, and mere omission does not constitute suppression. The Tribunal concluded that the penalties imposed were not justifiable due to the time-barred nature of the show cause notice.

Conclusion:
The Tribunal set aside the impugned order, ruling in favor of the appellant. The judgment highlighted that since the show cause notice did not raise a demand for service tax, which the appellant had paid, the issue of taxability remains open. The appeal was allowed based on the unsustainable nature of the impugned order, and the matter was remitted back for further consideration.