Whether simultaneous imposition of penalty under sections 76 & 78 justifiable?

PJ/Case Law/2014-15/2182

Case: SURYA CONSULTANTS Vs THE COMMISSIONER OF CENTRAL EXCISE, JAIPUR-I

Citation: 2013-TIOL-1717-CESTAT-DEL

Brief Facts: - The original Adjudicating Authority while confirming the demand of service tax and imposing penalty under Sections 77 and 78 of the Finance Act, 1994, did not impose any penalty under Section 76. Revenue challenged the said order before Commissioner (Appeals), who accepted their appeal and imposed penalty under Section 76. Aggrieved by the said order, the assessee filed the present appeal.

Appellant’s contention:- The appellants contended that the Hon'ble Punjab & Haryana High Court decision is later in point of time and it is also the Jurisdictional High Court of Delhi Benches of the Tribunal. As such, he submits that the same should be followed. He also sought attention to another decision of the Tribunal in the case of C.C.E., Haldia v. Mittal Technopack P. Ltd, reported in 2012-TIOL-1507-CESTAT-KOL, wherein Tribunal by taking note of both the decisions of the Hon'ble High Court has followed Hon'ble Punjab & Haryana High Court.

Respondent’s contention:- The Respondent referred to decision of Hon'ble Kerala High Court in the case of Assistant Commissioner of Central Excise v. Krishna Poduval reported in 2006 (1) S.T.R. 185 (Ker.) = (2006-TIOL-77-HC-KERALA-ST) laying down that incidence of imposition of penalties under the two sections are distinguish and separate and if offences are committed in courses of same transaction or arise out of same act separate penalties are imposable for ingredients of both the offences.

Reasoning of Judgment: - The Hon’ble Tribunal held that the Hon'ble Punjab & Haryana High Court in the case ofC.C.E. v. First Flight Courier Ltd. reported in 2011 (22) S.T.R. 622 (P&H) = (2011-TIOL-67-HC-P&H-ST) has held that imposition of penalty under Sections 76 and 78 of the Finance Act, 1994, prior to 10-5-2008 amounts to double jeopardy and if penalty has been imposed under Section 78 separate imposition of penalty under Section 76 is not justified. In view of the fact that Delhi Benches fall under the jurisdiction of Punjab & Haryana High Court and as such, are bound by the declaration of the law by the said High Court and also in view of fact that, that the Punjab & Haryana High Court decision is later in point of time, and that both the decision stand discussed by the decision of C.C.E., Haldia v. Mittal Technopack P. Ltd. = (2012-TIOL-1507-CESTAT-KOL) (supra), they by respectfully following said decision of the Punjab & Haryana High Court, set aside the impugned order of Commissioner (Appeals) as regards imposition of penalty under Section 76 of the Finance Act and allow the appeal with consequential relief to the appellant. Stay petition as also appeal get disposed of.

Decision: - The appeal was allowed.

Comment:- The analogy of this case is that the penalties under section 76 and 78 of finance act cannot be imposed simultaneously in light of the Punjab & Haryana High Court decision and the decision of C.C.E., Haldia v. Mittal Technopack P. Ltd. Moreover, when there are two contrary decisions given by two different high courts, the decision of the jurisdictional high court should be followed.

Prepared by: Kavita Thanvi

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PJ/Case Law/2014-15/2182

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