Whether simultaneous penalty under section 76 and 78 of the Finance Act can be imposed for period prior to amendment?

PJ/Case Laws/2012-13/1296

Case:- EXCISE, HALDIA Vs MITTAL TECH NOPACK P LTD

Citation:-2012-TIOL-1507-CESTAT-KOL

Issue:-Whether simultaneous penalty under section 76 and 78 of the Finance Act can be imposed for period prior to amendment?

Brief Facts:-The Assessee had rendered services under the heading 'Business Auxiliary Service' but failed to discharge the Service Tax. Consequently a show cause notice was issued to them for recovery of Service Tax as well as penalty under Section 76 and 78 of the Finance Act, 1994. The entire amount of Service Tax has been paid by the applicant before issuance of show cause notice. The Adjudicating Authority confirmed the demand and imposed penalty equivalent to Service Tax under Section 78 of the Finance Act 1994 only. The Revenue filed the appeal before the Commissioner of Central Excise (Appeals) for non imposition of penalty under 76 of the Finance Act. The Ld. Commissioner (Appeal) dismissed the appeal filed by the Revenue and upheld the order in original of the Lower Authority. Hence the present appeal.

Appellant Contentions:- The Appellant submitted that both the Lower authorities has erred in not imposing the penalty under 76 of the Finance Act and he relied on judgment of the Honible Kerala High Court in the case of Assistant Commissioner of Central Excise Vs, Krishna Poduval.

Respondent Contentions:- The Respondent submitted that both the Lower Authorities has rightly not imposed penalty under Section 76 once penalty under 78 of Finance Act was imposed. They submitted that the said concept of imposition of penalty both under Section 76 and 78 has been done away with by amending the respective provisions w.e.f. 10th May, 2008. This conforms the view taken by the Tribunal in a number of cases that penalty cannot be imposed under both these sections. In this connection, they have also referred to the recent judgment of Hon'ble Punjab and Haryana High Court in the case of Commissioner of Central Excise Vs. First Flight Courier Ltd.

Reasoning of Judgment:- We have considered submissions on both sides and after that the moot issue to be decided in the instant appeal is as to whether imposition of penalty under Section 76 of the Act is mandatory when penalty under Section 78 of the Act is there in the Order in Original? Section 76 of the Act provides imposition of penalty for failure to make payment of service tax in respect of SCN issued within stipulated one year time and section 78 of the Act provides imposition of penalty for SCN invoking extended period alleging fraud, suppression on the part of the assessee. We have relied on tribunal's judgment in the case of The Financers Vs. CCE wherein Double penalty under section 76 not imposable in cases where penalty imposed under section 78 for suppression". Therefore, we find that simultaneous imposition of both penalties is double punishment to the appellant and thus not justified. In a recent judgment of High Court, the case of Commissioner of Central Excise Vs. First Flight Courier Ltd. (supra) taking into consideration the amending provision, has specifically answered this question. In such situation, even if reasoning given by the appellate authority that penalty under section 78 of the Act was imposed, penalty under section 76 of the Act could never be imposed may not be correct. This thinking was also in consonance with the amendment now incorporated though the said amendment may not have been applicable at the relevant time. In view of the above, we find there is no merit in the appeal filed by the Revenue and accordingly the same is dismissed. Appeal is dismissed.

Decision: - Appeal dismissed.

Comment:This case draws the analogy that simultaneous penalty under section 76 and 78 of the Finance Act, 1994 cannot be imposed even for the period prior to the amendment i.e. 10.05.2008 But the department does not agree the same. They have imposed penalty under both the sections prior to 10.5.08. The litigation is going on. But after 10.5.08 that the law has been amended and it is categorically mentioned that the penalty cannot be imposed under both the sections.

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PJ/Case Laws/2012-13/1296

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