2009 (11) TMI 163 - AT - Service Tax

CESTAT Chennai Upholds Penalty under Section 76, Revokes Penalty under Section 78 for Late Tax Payment tax

The Appellate Tribunal CESTAT, Chennai upheld the penalty under section 76 but set aside the penalty under section 78 for delay in service tax payment. ... Willful suppression of taxable service - failure to obtain service tax registration - penalty under section 76 - penalty under section 78 - mutual exclusivity of penalties - payment before issue of notice not a defence in case of suppressionWillful suppression of taxable service - penalty under section 76 - payment before issue of notice not a defence in case of suppression - Validity of penalty imposed under section 76 for failure to register and remit service tax - HELD THAT: - The adjudicating authority recorded an unchallenged finding that the assessee wilfully avoided obtaining service tax registration for taxable services rendered. The Tribunal held that payment of tax before issuance of show-cause notice is not a sufficient defence where there is suppression. On that basis the Tribunal upheld the penalty imposed under section 76, rejecting the earlier basis (payment before notice) for setting aside the penalty. [Paras 2]Penalty under section 76 upheldFailure to obtain service tax registration - penalty under section 78 - mutual exclusivity of penalties - Whether penalty under section 78 could be sustained alongside penalty under section 76 - HELD THAT: - The Tribunal accepted the assessee's contention that penalties under sections 76 and 78 are mutually exclusive. Although the penalty under section 76 was upheld on the merits, the Tribunal set aside the penalty imposed under section 78 on the ground of mutual exclusivity and consequent impermissibility of levying both penalties for the same conduct. [Paras 2]Penalty under section 78 set asideFinal Conclusion: The appeal is partly allowed: the penalty under section 76 is sustained while the penalty under section 78 is quashed; the assessee's admission that tax liability is not disputed was noted and the adjudicating authority's finding of wilful avoidance of registration, unchallenged on appeal, was treated as decisive. The Appellate Tribunal CESTAT, Chennai upheld penalty under section 76 but set aside penalty under section 78 for delay in service tax payment. The appellants did not dispute the tax liability. The penalty of Rs. 39,463 under section 78 was revoked.