2008 (5) TMI 108

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....espondents it transpired that they had short-paid the tax due during the period 1999-2003. The lower authorities found that the respondents had not included all elements of taxable value in the assessable value for the purpose of payment of service tax. The original authority demanded differential duty of Rs. 39,750/- for the period March 2000 to July 2003, the applicable interest thereon and imposed equal amount of penalty (under Section 76 of the Finance Act, 1994). In the impugned order, the Commissioner (Appeals) sustained the order passed by the original authority except reducing the penalty imposed under Section 76 of the Finance Act, 1994 from Rs. 39,750/- to Rs. 10,000/-. The instant appeal has been filed by the Revenue for restorin....

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....f penalty under the provisions of the Finance Act. On consideration of provisions of Sections 76, 77 and 80 of the Finance Act, we have held that there is power in the authority to reduce the amount of penalty". It was held that unless the power was exercised arbitrarily that Court would not interfere with the exercise of discretion by the competent authority. (ii) Commissioner of Central Excise & Customs, Nasik Vs. Vinay Bele & Associates reported in 2008 (9) STR 350 (Bom.). "It was held the main contention as urged on behalf of the Revenue is that considering Section 76 of the Central Excise Act (sic) (Finance Act, 1994), the authorities had to impose the penalty as set out therein and there was no discretion to impose lesser penalt....

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.... tax due in time was not on account of any deliberate omission. An element of confusion existed in categorizing the activities by the appellants. The failure observed on the part of the respondents 'was on account of interpretation'. Under these circumstances, the Commissioner (Appeals) observed that the respondents deserved some leniency as regards quantum of penalty. Relying on the ratio of the decision of the Tribunal in M/s. Inma International Security Academy Pvt. Ltd. (supra) the Commissioner (Appeals) held that he had discretion as per Section 76 and found Rs. 10,000/- to be an appropriate penalty under Section 76 in the facts and circumstances of the case. 6. I find that the Hon'ble High Court of Bombay had laid down the law that....