2025 (6) TMI 1727

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....-Original was not correct and further the penalty was increased under Section 78 from Rs. 88,726/- to Rs. 17,65,437/- without giving them any notice as is required under the law. 2. Learned Advocate submits that they were providing certain construction services to Andhra Pradesh State Housing Corporation Ltd., (APSHCL) and were initially not paying service tax under the impression that the same was being paid by their Principal APSHCL. However, on being pointed out by the Department, they started paying the service tax. It is not in dispute that they had not paid the applicable service tax along with interest. What is disputed by the Department that in this case is that there should be equal penalty under Section 78, which was initially im....

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....bjections were not entertained. The details given by the Commissioner (Appeals) are in para 8 of the Order-in-Appeal as regards enhancement of penalty. The Commissioner (Appeals) has relied on certain judgments keeping in view the appeal filed by the Department and raised their penalty from Rs. 88,726/- to Rs. 17,65,437/- holding that the mandatory penalty under Section 78, it has to be the equal amount of duty demanded. He has further submitted that as provided under Section 85(4), the Commissioner (Appeals) ought to have given a reasonable opportunity to hear them before such enhancement. 4. On the other hand, Learned AR takes us through the observation of Commissioner (Appeals), Department is not objecting on merit of the case in so far....

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....pellant. However, there are catena of judgments which held that where the cross objections, per se, are not permissible, the said cross objections itself has to be taken as counter to the grounds taken by the Department. 7. Further, we note that, while the Commissioner (Appeals) has not considered that there is any provision for entertaining Cross Objections, however, he has taken into consideration, the grounds raised in their letter dated 31.08.2012 which not only included the grounds for Cross Objections but also other arguments as regards non-imposition of penalty. It is also an admitted fact that no specific show cause notice, as such, was issued to the respondent before enhancing the penalty as against the Order-in-Original. 8. We f....