2016 (3) TMI 485

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....ber 2010. By its order passed on 3 January 2015, the Tribunal allowed the assessee's appeal and set aside the penalty imposed under Section 78 of the Finance Act, 1994. 2. The appeal before the Tribunal was directed only against that part of the order of Commissioner (appeals) where he sustained the penalty under Section 78 of the Finance Act, 1994 and upheld the imposition thereof. 3. The argument of the assessee was that it was constructing the factory for a cooperative spinning mill by virtue of an agreement of 19 October 2001. The assessee is in the business of civil construction. It undertakes construction activity for both, the private sector and for State. At the time when this agreement was executed, there was no obligatio....

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....confirmed the penalty under Sections 77 and 78 but set aside penalty under Section 76 of the Finance Act, 1994. 5. The Tribunal set aside eventually all penalties. Mr.Jetly appearing for the Revenue by inviting our attention to paragraphs 2 to 4 of the Tribunal's order, would submit that Section 76 of the Finance Act, 1994 attracts penalty on failure to pay the service tax, Section 77 of the Finance Act, 1994 attracts penalty for contravention of the provisions of act and rules, whereas Section 78 provides for imposition of penalty in case of failure to pay service tax for reasons of fraud. Mr.Jetly's submission is that the substantial question of law arises simply because having found that the service tax has not been paid on ac....

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..... Having considered the rival submissions, I find that in view of the on going contract which was entered into prior to 10.09.2004 and the levy of tax being a new levy from 10.09.2004 and the appellant was under the bona fide belief that they do not fall under the Service Tax liability and keeping in mind the conduct of the appellant that he has discharged the Service Tax alongwith interest soon after being pointed out, it is a fit case for setting aside the penalty under Section 78 and accordingly I do so. Thus, the appeal is allowed in part." While assigning said reasons the Tribunal omitted from consideration the fact that though the contract was executed prior to 10 September 2004, the same was a continuing contract and obligation. T....