AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (8) TMI 788
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....er of Service Tax , Ahmedabad vs. Adani Gas Ltd (now known as Adani Energy Ltd) -2020 (40) GSTL 145 (SC). He submits that the Adjudicating Authority did not impose the penalty under Section 78 of the Finance Act, 1994 relying on the judgment of Nizam Sugar Factory - 2006 (197 ) ELT 465 (SC) which is erroneous and fallacious. 2.1 He submits that the Learned Commissioner has failed to consider that the service provider has failed to give details for issuance of show cause notice for the subsequent period nor there is any evidence to the fact that the service provider has done something wrong to suppress the details. Therefore, without examining this fact refraining from imposing penalty under section 78 is not correct. The Learned Commissioner also failed to surmise that there can be number of eventualities where provision of Section 78 can be invoked such as fraud or collusion or any wilfulmis-statement or suppression of facts or contravention of any of the provision of this act or on the rule made thereunder with intention to evade payment of duty. 2.2 He further submits that reliance of the Learned Commissioner on judgment of Nizam Sugar Factory (Supra) is not proper, as in ....
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....es and perused the records. We find that by this appeal, Revenue sought to impose penalty under Section 78 of Finance Act, 1994. We find that in the show cause notice penalties under both Sections i.e. Section 76 and 78 were proposed to be imposed. Learned Commissioner has imposed penalty under Section 76 and for this reason also simultaneously penalty under Section 78 cannot be imposed as held by the Hon'ble Gujarat High court in the case of Raval Trading Company (Supra) as under:- "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 revenue authorities. The explanation offered by the assessee was not accepted. It was the case of the assessee that unaware of the tax liability, the service tax was not deposited with the department. Had this been the case, the assessee would have ....
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....ct, 1994, has been substantially amended with effect from 14-5-2015 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 short-levied or short-paid or erroneously refunded, by reason of fraud or collusion or wilful misstatement, etc., whereas Section 76 covered the cases of non-payment 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 entirely different than in case of Section 76 of the Finance Act, 1994. However, the language of Section 76 did not specifically exclude the situation; otherwise covered under Section 78 namely non-payment of tax on account of w....
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....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 non-payment of tax by reason of fraud or collusion or wilful 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 v. First Flight Courier Limited [2011 (22) S.T.R. 622 (P&H) in which in paras 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 10-5-2008, 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 period prior thereto, penalty could be levied under both Sections. The Commissioner (Appeals) as well as the Tribunal erred in deleting the penalty under Section 76 by assuming that simultaneously penalt....
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....ribunal 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 18-4-2006 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 the requirement of Section 78, a separate penalty is stipulated in the said provision. Section 78 applies to a case where a person has registered himself under the Act and failed to file t....
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....iction not to levy the penalty under Section 76 of the Act having regard to the fact that penalty equal to service tax had already been imposed under Section 78 of the Act. This thinking was also in consonance with the amendment now incorporated though the said amendment may not have been applicable at the relevant time. Moreover, the amount involved is Rs. 51,026/- only." The Court, thus, chose not to interfere with the aforesaid discretion of the Tribunal." 16. Under the circumstances, we answer the additional question in favour of the appellant-assessee and delete the penalty under Section 76 of the Finance Act, 1994, while upholding the penalty imposed under Section 78 and other penalties. The tax appeal is accordingly disposed of with no order as to costs. 4.1 Similar view was taken by the Hon'ble Gujarat High Court in the case of Sai Consulting Engineering Pvt Ltd (Supra). The order is reproduced below:- "The appeal is filed by the department challenging the judgment of CESTAT dated 13-6-2017 raising the following question for our consideration : "Whether in the facts and circumstances of the case and law, the Hon'ble Tribunal has committed subst....
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.... In view of the nature of this further proviso and the relevant position of the two statutory provisions both pertaining to penalty, we are convinced that the proviso was in the nature of clarificatory amendment and not creating a liability for the first time. Even without the aid to this further proviso to Section 78, one entire plausible view was that the situation envisaged under Section 76 of the Finance Act, 1994, would exclude those cases covered under Section 78 of the Finance Act, 1994. In other words, Section 76 of the Finance Act, 1994, would cover only the cases of non-payment of service tax which are not related to fraud, collusion, willful mis-statement, suppression of facts or contravention of any of the provisions of the said Chapter or the rules made thereunder with the intent to evade payment of service tax since legislature had already provided for penalty in Section 78 in such situations. Thus further proviso to Section 78 made it explicit which was till then implicit." 4. The Court noticed that similar view was expressed by Punjab and Haryana High Court in case of Commissioner of Central Excise v. First Flight Courier Limited reported in 2011 (22) S.T.R....