AI Drafter 
TaxTMI 
TaxTMI 
2015 (5) TMI 145
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....al, framed the following substantial questions of law for consideration :- "1) Whether the Hon'ble Tribunal is legal and correct in setting aside the penalty imposed under Section 78 of the Finance Act, 1994, when there was wilful suppression of facts with an intent to evade service tax, as vividly brought out in the show cause notice which was affirmed in Order-in-Original? 2) Whether the Hon'ble Tribunal is right in holding that there is no need in this case for imposition of penalty under Section 78 of the Finance Act, 1994 while the demand of service tax was held to be sustainable for extended period in terms of proviso to Section 73 (1) of the Act, which also required the above ingredients to be satisfied?" 2. The appe....
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....resent appeal. 4. Heard the learned standing counsel appearing for the appellant/Department and the learned counsel appearing for the respondent/assessee and perused the materials available in the typed set of documents. 5. The main bone of contention of the Department is that the finding of the adjudicating authority is very clear and categorical, in that there is a wilful suppression of the value of taxable services rendered by the assessee and, therefore, penalty is also imposable under Section 78 of the Act. For better clarity, the order of the original authority, imposing penalty, is extracted hereinbelow :- "12. From the above it is also seen that Joe Transport have intentionally suppressed the taxable services provided by th....
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.... 75 of the Finance Act, 1994. 14. In view of the above, I pass the following order :- i. I confirm the demand of Rs. 4,06,449/- (Service Tax : Rs. 4,04,312 and Education Cess : Rs. 2,317/-) (Rupees Four Lakh Six Thousand four Hundred and Forty Nine only) being the service tax payable for the period from June, 2001 to December, 2005, on Joe Transport, Nagapattinam, under proviso to erstwhile Section 73 (a)/Section 73 (1) (a)/ present Section 73 (1) of the Chapter V of the Finance Act, 1994; ii. I appropriate an amount of Rs. 4,06,449/- out of the total amount of Rs. 5,89,971/- already paid by them, against the service tax due as in (i) above; iii. I confirm the demand of Rs. 1,77,296/- (Rupees One Lakh Seventy Seven Thousand Two ....
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....94." 6. It is the further submission of the Department that once the wilful suppression on the part of the assessee stands proved, the Department is empowered to impose penalty under Section 76 as well as under Section 78 of the Finance Act, 1994, and that the imposition of penalty is mandatory and is not at the discretion of the authority. 7. The question of imposition of penalty has been decided by the Larger Bench decision of the Supreme Court in Union of India and others v. Dharamendra Textile Processors and Others, 2008 (231) ELT 3 (SC), wherein it was held that penalty under Section 11AC of the Central Excise Act is mandatory and there is no element of discretion. The relevant portion of the said decision reads as under: "26.....
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....11AC is concerned. We make no observations (as a matter of fact there is no occasion for it!) with regard to the several other statutory provisions that came up for consideration in that decision. 25. In the light of the discussion made above it is evident that in both the appeals, orders were passed by the Tribunal on a wrong premise. In both the appeals, therefore, the impugned orders passed by the Tribunal are set aside and the matters are remitted to the respective Tribunals for fresh consideration, in accordance with law, and in the light of this judgment...." 9. This Court also, in the case of Dhandayuthapani Canteen - Vs - CESTAT (CMA No.2440 of 2008 dated 12.12.2014), considering the various case laws, as discussed above, on t....