TaxTMI 
TaxTMI 
2010 (12) TMI 553
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.... order No. A/2372/WZB/AHD/2007 dated 3-9-2007, set-aside the order passed by Commissioner (Appeals) and remanded the matter to original adjudicating authority for de novo consideration with directions to the assessee to produce all the evidences before original adjudicating authority. Thereafter, the matter was adjudicated and on an appeal filed by the assessee, Commissioner (Appeals) passed order No. 117/2008 dated 5-5-2008, wherein he reduced the penalty under Section 76 to Rs. 10,000/- from Rs. 20,000/- and set-aside the penalty under Section 78 of the Finance Act, 1994. Against this order, Revenue filed an appeal before this Tribunal and this Tribunal vide order No. A/2836/WZB/AHD/2008 dated 29-12-2008, rejected the appeal filed by the Revenue. Against this decision, Revenue filed an appeal before the Hon'ble Gujarat High Court and the Hon'ble High Court remanded the matter to the Tribunal with following observations :- "(11) In so far as sectin 80 of the Act is concerned, it overrides provisions of sections 76, 77, 78 ad 79 of the Act and provides that no penalty shall be imposable even if any one of the said provisions are attracted if the assessee proves that there was reas....
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....the fact that in none of the judgments have the provisions of either Section 76 or Section 80 of the Act been analyzed and dealt with. (15) In the circumstances, the impugned order of Tribunal dated 26-12-2008 is hereby quashed and set-aside and appeal No. ST/126/2008 stands restored to file of the Tribunal for deciding the same afresh in accordance with law. Existence or otherwise of reasonable cause having not been pleaded before any authority at any stage, the contentious based on the same raised by learned counsel for the assessee have not been gone into, leaving it open to the assessee to raise the same before the Tribunal. The question is accordingly answered in the negative. The appeal stands disposed of accordingly." 2. There is no dispute that service tax was payable on the services rendered at the rate of service tax 10% towards service tax and 2% service tax towards education cess. There is also no dispute that differential service tax became payable because of the failure of the assessee to collect the service tax at the rate of 10.2% instead of 8% during the period from 10-9-2004 to 13-9-2004. The grievance of the Revenue is that Commissioner (Appeals) has reduc....
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....ing which such failure continues or at the rate of two percent of such tax, per month, whichever is higher, starting with the first day after the due date till the date of actual payment of the outstanding amount of service tax. Provided that the total amount of the penalty payable in terms of this Section shall not exceed the service tax payable." Section 80 of Finance Act, 1994 reads as under :- "Penalty not to be imposed in certain cases. 80. Notwithstanding anything contained in the provisions of Section 76, Section 77 [or Section 78], no penalty shall be imposable on the assessee for any failure referred to in the said provisions, if the assessee proves that there was reasonable cause for the said failure." 5. The first question to be decided is whether the assessee has shown reasonable cause for the delayed payment. From the records, it is seen that the assessee had raised invoices and had shown 8% towards service tax during the relevant period of four days. The differential amount was paid by 2-9-2006 and interest was paid on 20-12-2007. In the initial round of litigation, penalty under Section 78 of Finance Act, 1994. As regards penalty under Section 76, at t....
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....o has been visited with penalty, the issue before the Tribunal for consideration would be whether this is a fit case for enhancement or not. Since I agree with the view taken by the Commissioner (Appeals) that assessee has shown reasonable cause and is eligible to the benefit of Section 80, the question of enhancement does not arise. At the same time, I am not in a position to hold that penalty is to be reduced to zero in the absence of the appeal by the assessee. Further, if penalty is reduced to zero, it would amount to putting Revenue in a worse position before appeal was filed which is against the settled law. 8. Further, I also find that in the decisions cited by the learned Chartered Accountant on behalf of the assessee, Hon'ble Mumbai High Court had taken a similar view. In the case of Vinay Bele and Associates [2008 (9) S.T.R. 350 (Bom.)] the main contention on behalf of the Revenue was that authorities has no discretion to impose less penalty under Section 76 of Finance Act, 1994. The Hon'ble High Court observed that after considering Section 80, such discretion is available to the authority. In the case of S.R. Enterprises, the Hon'ble High Court observed that decis....