Whether discretionary power to waive penalty under section 80 appealable to higher judicial forum?

PJ/Case Law/2013-14/1859

Case:- HOYSALA DEVELOPERS VERSUS COMMISSIONER OF SERVICE TAX, BANGALORE

Citation:- 2013(31) S.T.R. 467(Tri.-Bang.)

Brief Facts:-The applicant filed this application for waiver of pre-deposit of penalties imposed by the Commissioner under the Review proceedings under Section 84 of the Finance Act, 1994. The applicant had paid Service Tax along with interest and the adjudicating authority, by invoking the provisions of Section 80, dropped the proposal for imposing penalties under Sections 76, 77 and 78 of the Finance Act.

Appellant Contentions:-The contention of the applicant is that the Commissioner of Service Tax is not justified in reviewing the order passed by the adjudicating authority, as the adjudicating authority has exercised discretion conferred under Section 80 of the Finance Act and relied upon the decision of the Hon’ble Karnataka High Court in the case of CCE, Bangalore-III v. Sunitha Shelly reported in 2006 (3) S.T.R. 404 (Kar.)=2004 (174) E.L.T. 313 (Kar.).

Respondent Contentions:-The contention of Revenue is that in the present case, demand of Service Tax is confirmed by invoking larger period on the ground of suppression of facts. The contention is that as the applicants accepted the adjudication order whereby the extended period of limitation was invoked on the- ground of suppression, therefore, the impugned order is rightly passed.

Reasoning of Judgment:-We find that the Hon’ble Karnataka High Court, in the case of Sunitha Shetty (supra), upheld the order passed by the Tribunal whereby the Tribunal held that the Commissioner was not justified in reviewing the order passed by the adjudicating authority exercising the discretion conferred under Section 80 of the Finance Act. In view of the decision of the Hon'ble Karnataka High Court, prima facie, we find that the applicant has a strong case. Therefore, the pre-deposit of the penalties are waived and recovery of the same is stayed during the pendency of the appeal. Stay petition is allowed.

Decision:-Stay petition is allowed.

Comment:- The essence of this case is that Commissioner is not justified in reviewing the order passed by the adjudicating authority exercising the discretion conferred under Section 80 of the Finance Act on the basis of decision of Sunitha Shetty given by Karnataka High Court.

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PJ/Case Law/2013-14/1859

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