Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  The GSTN has issued an Advisory dated 21.04.2026 about the introduction of an Offline Tool for the Invoice Management System (IMS)  *  CBIC extends due dates for filing of FORM GSTR 3B  for the month of April 2026 *  Interest cannot be imposed in adjudication order, if not demanded/quantified in show cause notice : Allahabad HC *  Wheelchairs with toileting facility eligible for exemption: CESTAT affirms customs duty exemption to importer *  Industries urge GST council to allow inverted duty refunds on input services *  Tamil Nadu GST dept introduced virtual hearing facility for GST appeals under under section 107 of the TNGST act: detailed guidelines  *  CIC urges authorities to implement GST evasion complaint tracking system *  Even if the assessee opts "NO" for personal hearing in form DRC-06 ,The mandatory requirement under section 75(4) to grant opportunity of hearing cannot be waived:Gujarat High Court  *  Glufosinate imports curbs imposed by govt *  Government extends Re-import period for exported cut & polished diamonds *  CIC flags lack of tracking system for tax evasion complaints,urges GST authorities to improve transparency *  No Custodial Interrogation needed in GST fraud case based on documentary evidence already in Department's Possession : Chattisgarh HC *  Orders under section cannot be sustained if passed without considering the taxpayer's objections and without granting a personal hearing:Gujarat High Court *  Mere cancellation of supplier's registration cannot,by itself,justify denial of ITC or cancellation of the recipient's registration:Bombay High Court *  High Court sets aside GST notice citing factual errors and natural justice violations *  Provisional Bank Attachment under Section. 110 of Customs Act Unsustainable Beyond Statutory period without Extension order: Bombay HC orders to defreeze accounts *  Post Clearance MRP Alteration by Distributor Does not attract Differential Customs Duty: CESTAT *  DGFT Expands scope of 'Screws' classification under RoDTEP Scheme  *  E-way bills surze to all time high of 140.6 million in March *  GST Exemption Allowed on Pure Labour Services for Standalone Houses: AAR  *  GST Payable Only on Margin in Second-Hand Car Sales, Subject to Strict Conditions and No ITC Claim: AAR *  DGFT rolls out procedure for allocation of calcined coke *  GST portal update : Pre-deposit amount now editable in Appeals *  J&K HC declared TMT scrap a 'Specified Good' eligibile for GST refunds under Support Scheme  *  Pigmy agents are employees of banks; no GST can be levied on commission  paid to them : Karnataka HC *  DGFT Revises HS Code Description for Screws Under RoDTEP *  GST Registration Cancellation Invalid Without Proper Service of Notice: Allahabad High Court. *  Bengaluru CGST | GST Backlog Appeals Deadline Fixed at June 30, 2026 *  No Time Bar on Refund of Service Tax for Services Not Rendered: CESTAT  Remands Indiabulls Case for Unjust Enrichment Check. *  Supreme Court Holds Renewable Energy Incentive Must Benefit Generators, Not Be Adjusted in Tariff
Subject News *   Delhi HC Quashes Order, Says Reminder Cannot Validate Improperly Served GST SCN *  KARNATAKA HIGH COURT REMANDS GST SHORTFALL MATTER DUE TO ABSENCE OF PERSONAL HEARING   *  CESTAT cancels confiscation and penalties on imported computer cabinet cases: Custom duty restricted to 111 surplus units *  Deposit of tax during search or investigation cannot be treated as 'Voluntary Payment' : Bombay High Court *  Section 76 of the CGST cannot be invoked where the tax has already been duly deposited, even if through another registration of the same entity: Madras High Court *  Sec 74 allows use of material regardless of source; illegality or flaws in section 67 search do not vitiate valid adjudication: HC *  Inter-State transfer of ITC on Amalgamation permissible as given under section 18(3) read with rule 41 of the CGST rules, 2017: Gujarat High Court *  HC: No GST on commisson paid to Pigmy Agents *  IGST refund denial on illegible bill of lading invalid absent chance to furnish docs; merit reconsideration in appeals directed: HC *  ITC is not admissible on GST paid on leasehold rights of land used fpr setting up an air seperation plant: AAAR,Tamil Nadu *  GST: No penalty under Section 74 after voluntary ITC reversal due to non-existent supplier : High Court *  TN AAAR denies GST ITC on Land Lease under Sec. 17(5)(d) for setting up plant and machinery *  GST proceedings quashed as notices sent to old address, despite updated address in registration *  Importer Can’t Be Penalised for Alleged IGCR Procedural Lapses Without Evidence of Departmental Error: CESTAT *  Structured Healthcare Training Not ‘Charitable Activity’, 18% GST Payable: AAR  *  CESTAT As The Appellate Authority For Central Sales Tax Disputes: A Paradigm Shift Under Finance Act, 2023 *   Rs. 25K Cost Imposed On SGST Joint Commissioner for Attaching Bank  Accounts Without Forming Mandatory “Opinion”: Bombay HC *   Ex-Parte GST Order Without Hearing Violates Natural Justice: Karnataka  High Court Quashes Adjudication and Bank Attachment.  *   Retrospective GST Cancellation Can’t Invalidate Genuine Transactions:  Jaipur Commissioner (Appeals) Quashes Rs. 95,670 ITC Demand. *   GST Pre-Deposit Non-Compliance: Allahabad High Court Allows Appeal  Subject to Rs. 30 Lakh Balance Deposit, Recognises Offline Filing. *  Documentary Nature of Evidence: Allahabad High Court Grants Bail in Rs. 32.66 Crore Fake ITC Fraud Case *  Supreme Court Flags Systemic Bias in Army’s Permanent Commission Process for Women Officers *  Re-Determination of Land Compensation Can Be Based on Appellate Court Awards, Clarifies Scope of S. 28-A: Supreme Court. *  Supreme Court Imposes Rs. 5 Lakh Costs On Rent Authority Officer For Acting Beyond Jurisdiction. *  DGGI Meerut | Court Denies Bail to Accused in Claiming Fake ITC And Export Refunds *  Denial of GST Rate Revision Benefit to Contractor Violates Article 14: Rajasthan HC *  GST Registration Cancellation for Non-Filing of Returns: Gauhati High Court Directs Restoration on Compliance. *   Supreme Court Quashes FEMA Adjudication Orders, Revives Proceedings at  Show Cause Stage. *   Higher Rank, Harsher Punishment Justified: Supreme Court Restores Dismissal  of Bank Manager in Misappropriation Case. *   Limitation for Export Refund to Be Counted from Foreign Exchange Realisation,  Not From Export Invoices Issuance: CESTAT  

Comments

Print   |    |  Comment

PJ/CASE LAW/2014-15/2510

Whether the appellant is liable to pay penalty either under Section 76 or under Section 78 of the Finance Act, 1994?

Case:- Professional Investment Corporation Versus C.C.E. (Appeals), Madurai
 
Citation:- 2014 (36) S.T.R. 59 (Mad.)
 
Brief fact:-The respondent herein has issued a show cause notice dated 15-10-2009, wherein a specific demand has been made to the effect that the appellant/assessee should pay service tax, interest together with penalty under Sections 76 and 78 of the Finance Act, 1994. The demand made in the show cause notice has been accepted by way of passing Order-in-Original No. 13/ADC/ST/2010, dated 5-5-2010. The Order-in-Original has been challenged before the Commissioner of Central Excise (Appeals), Madurai. The Commissioner of Central Excise (Appeals), Madurai has found that the assessee is liable to pay penalty under Section 78 of the said Act. The same has been challenged before the CESTAT. The CESTAT after hearing both sides has rejected the Appeal preferred by the assessee by way of holding that assessee is liable to pay penalty under Section 76. Against the order passed by the CESTAT, the present Civil Miscellaneous Appeal has been preferred by the assessee as an appellant.
Before considering the rival submissions made on either side, narration of the following facts is very much essential. It is an admitted fact that the appellant is liable to pay service tax. It is also a settled principle of law that as per Sections 76 and 70 of the Finance Act, 1994, the Department is entitled to levy penalty as well as interest under the circumstances mentioned therein. In the instant case, in the show cause notice dated 15-10-2009, demand of interest and penalty have been demanded under Sections 76 and 78 of the said Act. The Commissioner of Appeals has decided that the appellant/assessee is liable to pay penalty under Section 78. But the Appellate Tribunal has held that the assessee is liable to pay tax under Section 76.
 
 
Appellant’s contention:- The learned counsel appearing for the appellant has contended that since in the Order-in-Original it has been specifically found to the effect that the assessee is liable to pay tax under Section 78 and confirmed by the Commissioner of Central Excise (Appeals), the appellate Tribunal has no power to decide that the assessee is liable to pay penalty under Section 76 and further the assesses has already paid service tax together with interest and for invoking Section 80 of the said Act, the Appellate Tribunal has not given any opportunity and further in Section 80 of the said Act, it has been specifically stated to the effect that if any assessee has shown sufficient reason, penalty cannot be imposed. Under the said circumstances, the entire order passed by the Appellate Tribunal is erroneous and the same is liable to be set aside.
 
 
Respondent’s contention:- The learned counsel appearing for the respondent/department has contended that even though in the Order-in-Original as well as in the order passed by the Commissioner of Appeals it has been specifically found that, the assessee .is liable to pay penalty under Section 78, the appellate Tribunal has rightly held that the assesses is liable to pay penalty under Section 76 by way of invoking its inherent powers and further a submission has been made on the side of the assessee to that effect before the Appellate Tribunal. Under the said circumstances, the order passed by the Appellate Tribunal does not require any interference.
 
 
Reasoning of judgment:- The Appellate Tribunal has categorically held that the appellant/assesses is liable to pay penalty under Section 76.
As rightly pointed out on the side of the appellant/assesses, against the order passed in Original as well against the order passed by the Commissioner of Appeals, no appeal has been preferred by the Department by way of saying that proper section applicable to the present case is only [Section] 76 and not Section 78.
Even though the Department has not preferred any Appeal so as to decide relevant section, as per Section 35C of the Central Excise Act, 1944, the Appellate Tribunal is having enormous powers to pass suitable order and therefore, the first point urged on the side of the appellant cannot be accepted.
Now the Court has to look into the second point raised on the side of the appellant/assessee. The second point is that as per Section 80 of the Finance Act, 1994, if sufficient reason has been shown by an assessee, he is not bound to pay penalty.
As rightly pointed out on the side of the appellant/assessee, such opportunity has not been given by the Appellate Tribunal for coming to a conclusion as to whether the appellant/assessee is entitled to get such kind of benefit/exemption. Since sufficient opportunity has not been given for getting such kind of exemption, this Court is of the view to set aside the final order passed by the CESTAT and remit the matter to its file.
In fine, this Civil Miscellaneous Appeal is allowed without cost. The Final Order No. 241/2012 in Appeal No. ST/221/2011 passed by the CESTAT, Chennai is set aside and the matter is remitted to the file of Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai for considering the second point urged on the side of the appellant/assessee.
 
Decision:- Appeal allowed.
 
Comment:- The analogy of the case is that the assessee is liable for penalty either under section 76 or section 78 of the Finance Act, 1994. If penalty imposed under section 78 then penalty under section cannot be imposed. Section 78 provided that if the penalty is payable under this section, the provisions of section 76 shall not apply. According to section 80 of Finance Act, 1994, no penalty shall be imposable on the assessee for any failure referred to in provisions of section 76[sec. 77 or proviso to sub- section (1) of section 78], if the assessee proves that there was reasonable cause for the said failure. The Appellate Tribunal has not given any opportunity for getting such kind of exemption. Hence, appellant is not liable to pay any penalty.
 
Prepared by:- Monika Tak

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com