TaxTMI 
TaxTMI 
2023 (4) TMI 1443
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....riginal No. 11-12/2012 dated 31.12.2012 vide which while confirming the impugned demand, penalty has also been imposed under Section 76 and 77 of the Central Excise Act. The assessee has been aggrieved of the said imposition and vide the impugned appeal has prayed for setting aside of the imposition of penalty. On the contrary, department vide their appeal have prayed for imposition of additional penalty upon assessee under Section 78 of Central Excise Act. 2. The facts in brief are as follows: The appellant-assessee has been registered with Service Tax Department under the category of 'Business Auxiliary Service'. During the course of the audit of the assesse as was conducted from 17.08.2009 to 19.08.2009 and subsequently on ....
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....ized Representative for the department. 4. Learned Counsel for the appellant-assessee has mentioned that their appeal has a very narrow scope insofar as, only setting aside of the penalties imposed upon assessee is being prayed. It is submitted that the assessee was liable to deposit such amount of service tax as was demanded vide both the show cause notices. Though at the relevant time the appellant had made the payment, in discharge of his liability, however, the said payment was short discharge for the impugned period. Learned Counsel mentioned that it was due to the justified ground of assessee being under severe financial crunch. It is submitted that the year of 2009-10 was the year of global financial breakdown. It is also mentione....
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....aled during audit only, present is a clear case of suppression of facts. Resultantly, penalty under Section 78 of the Finance Act, as was proposed in the show caue notice, should also have been imposed upon the assessee. The order under challenge is accordingly prayed to be modified by both the parties. 6. Having heard the rival contentions of the parties. 7. We find that issue in both these cross appeals lie in narrow compass i.e. only with respect to the imposition/non-imposition of penalties upon the assessee. In the appeal filed by the assessee, the imposition of penalty under Section 76 and 78 of Finance Act 1944 is prayed to be set aside, whereas the department in their cross appeal have prayed for imposition of additional penal....
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....mptly after receiving the funds, we are of the opinion that the adjudicating authority should not have imposed the penalties under Section 76 and 77 of the Act. Proviso to both these sections prescribes non-imposition of penalty if the duty stands paid. 10. Thus, it is clear that the present is a fit case where Section 80 would have been invoked by the adjudicating authority. Sub-clause (1) thereof reads as follows: "(1) Notwithstanding anything contained in the provisions of section 76, or section 77, no penalty shall be imposable on the assessee for any failure referred to in the said provisions, if the assessee proves that there was reasonable cause for the said failure." The plea of financial crunch owing to global financ....
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....essee. 12. By no stretch of imagination, the act of short payment in the given facts and circumstances can be held to be an Act of fraud. Form the wordings of Section 78 itself, we observe that the liability to pay penalty is not arising merely on the basis of default, it arises only when the non-payment is by the reason of fraud or collusion or willful misstatement or suppression of facts etc. An order imposing penalty is otherwise a result of quasi criminal proceedings and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is la....