TaxTMI 
TaxTMI 
2016 (2) TMI 172
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.... the challenge of the assessee is against imposition of penalties on the grounds of fraud, collusion, willful misstatement, suppression of fact etc. However, at the time of hearing of this appeal, learned advocate Shri Gupta for the assessee raised additional contention that it was not open for the department to impose simultaneous penalties under Sections 76 and 78 of the Finance Act, 1994. Being satisfied that such a question does arise out of the impugned order of the Tribunal, we would frame additional question of law as under: "Whether it was open for the adjudicating authority to impose simultaneous penalties upon the assessee both under Sections 76 and 78 of the Finance Act, 1994?" 3. These questions arise in the following background: 3.1 The appellant - assessee, a partnership firm, is engaged in the business of marketing and selling offset printing machines and related products as a commission agent. For the period between 09.07.2004 and 31.03.2006 though the assessee was liable to pay service tax on such services rendered by it, failed to deposit the same with the department. It was only upon investigation by the department that the assessee in November 200....
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.... of the Finance Act, 1994 for suppressing and not disclosing the value of the said taxable services provided by them before the department within an intent to evade payment of service tax amounting to Rs. 3,48,387/. However, the amount of penalty shall be reduced to 25% of the amount of service tax, if amount of penalty is paid within 30 days of the date of receipt of this order." 3.5 The assessee preferred appeal against the order in original. The appellate authority dismissed the appeal making following observations: "The appellants were in the business for long and cannot seek benefits under the guise of unawareness about law provisions. There was no confusion so far as taxability of, and exemptions to, activities of the commission agent. The appellants could have approached the department for clarification in case of any confusion. Instead, they preferred to decide the applicability of service tax as per their belief and did not pay service tax deliberately upto the period under dispute. This also indicates the intention of the appellants to avoid payment of service tax. It is an admitted fact that the appellants did not pay the service tax on their own and....
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....t was made, post the period in question in the present case, various High Courts have held that this amendment is merely clarificatory in nature and would therefore apply to the cases arising prior in time also. 5. On the other hand, learned counsel Mr.Ravani for the department opposed the appeal. He contended that there was clear suppression on part of assessee and contravention of the provisions of the Act with a view to evade the payment of service tax. The penalty under Section 78 was therefore rightly imposed. He further submitted that further proviso came to be added in Section 78 long after the period in question was over and the same therefore cannot be applied to delete the penalty under Section 76 of the Finance Act, 1994. 6. Insofar as the first question is concerned, we have no hesitation in confirming the penalty imposed under Section 78 of the Finance Act, 1994. The adjudicating authority the appellate authority and the Customs Excise and Service Tax Appellate Tribunal, Ahmedabad concurrently held that the assessee who was not a small firm and was liable to pay service tax as was admitted by its partner in a written statement, had not deposited the same with the....
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....utstanding amount of service tax. The proviso to Section 76 provided that the total amount of the penalty payable in terms of the said provision shall not exceed fifty per cent of the service tax payable. This Section 76 of the Finance Act, 1994, has been substantially amended with effect from 14.05.2015 to which we would make a reference at later stage. 9. It can thus be seen that at the relevant time Section 78 of the Finance Act, 1994, provided for penalty in cases of tax not being levied or paid, or shortlevied or shortpaid or erroneously refunded, by reason of fraud or collusion or willful misstatement etc., whereas Section 76 covered the cases of nonpayment of tax on any ground whatsoever. The penalty that authority could impose under Section 78 is hundred per cent of the amount of the service tax evaded. On the other hand, the penalty under Section 76 which could be imposed is at the fixed amount per day for the entire duration of the failure to deposit the tax which, in any case, would not exceed fifty percent of the service tax payable. 10. The tenor, background and the purpose for which the penalty could be imposed under Section 78 of the Finance Act, 1994, is entir....
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....apter 5 or the rules made thereunder with an intent to evade the payment of service tax, the person liable shall in addition to service tax and interest also be liable to pay penalty not exceeding ten per cent of the amount of such service tax. Thus, by way of this amendment, the statute has ensured that Sections 76 and 78 of the Finance Act, 1994, apply in mutually exclusive areas. In other words, the cases of nonpayment of tax by reason of fraud or collusion or willful misstatement or suppression of facts etc., would be covered under Section 78 of the Finance Act, 1994, and all cases other than those envisaged under Section 78 would be covered under Section 76 of the Finance Act, 1994. 13. The view taken by us is supported by the judgment of Punjab and Haryana High Court in the case of Commissioner of Central Excise Vs. First Flight Courier Limited [ 2011(22) S.T.R. 622 (P&H) in which in para 4 and 5 it was held and observed as under: "4. Only point which has been urged by learned counsel for the appellant is that after 10052008, there is an amendment providing that penalty under Section 76 could not be levied if penalty under Section 78 has been levied but for the pe....
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....g penal in nature has to be strictly considered. If two views are possible, it is that view which is beneficial to the assessee which is to be preferred. That is what has been done by the Tribunal as well as by this Court. Therefore, it is not possible to accept the contention of the revenue that less than one hundred rupees has to be considered as less than one hundred rupees for everyday. 18. Probably, noticing this loophole, the Legislature taking note of the judicial pronouncement, from 1842006 amended the law so as to include `every day' after the words one hundred rupees. Therefore, till such amendment, the interpretation placed by the Judicial authorities has been accepted by the Government. That is the cause for amendment. Therefore, the minimum penalty leviable under Section 76 is one hundred rupees and the maximum penalty leviable is two hundred rupees per day, during the relevant period. However, the same is subject to the condition stipulated in the said section that he has failed to pay service tax. Therefore, discretion is left to the authority to prescribe the measure of penalty between these two stipulations. 19. If it is a failure to comply with t....