Whethersimultaneous imposition of penalty under section 76 & 78 justifiable when part demand paid before issuance of SCN?

PJ/Case Law/2013-14/1860

Case:- JOE TRANSPORT Versus COMMIISSIONER CENTRAL EXCISE, TRICHY

Citation:- 2010 (18) S.T.R. 646 (Tri.- Chennai)

Brief facts:-The facts of the case is that the appellant said that they had paid the demand partly before the issuance of show cause notice and partly before the conclusion of adjudicating proceedings. But the department had raised the demand on the basis that the appellant had not paid full amount of service tax along with interest before issuance of show cause notice and so is liable for penalty under section 76 & 78, against which the appellant has filed an appeal before the Tribunal.

Appellant Contentions:-The appellant submits that the service tax amount has since been paid by the appellants partly before issue of the show-cause notice and partly before conclusion of the adjudication proceedings. He further stated that provisions of Section 73(3) of the Finance Act, 1994 should have been applied in the case of the appellants and no penalty should have been imposed. As regards interest on the delayed payment, learned Advocate undertakes to pay the same immediately. He also prays that in case penalty is held to be imposable, there is no case for imposition of penalty under Section 76 as well as under Section 78 of the Finance Act, 1994 as the appellants had not paid the tax merely on the ground that the customers had not paid the tax to them and there was no suppression of the value of the taxable service.

Respondent Contentions:- The respondent submits that the appellant had not paid the full amount of the tax and interest thereon before issue of show-cause notice and hence the benefit of Section 73(3) cannot be allowed in their case.He also states that imposition of penalty under Sections 76 & 78 is justified.

Reasoning of Judgment:-After hearing both sides and persuing the records, the CESTAT finds that the appellants have paid only part of the tax amount before issue of the show-cause notice and the remaining amounts have been paid during the continuance of the adjudication proceedings. The interest amount has not been paid so far. Under the circumstances, the provisions of Section 73(3) of the Finance Act, 1994 cannot be applied to the facts of the appellants. However, the Tribunal is of the view that, in the facts and circumstances of the case, imposition of penalty under Section 76 of the Finance Act, 1994 meets the ends of justice. There is no need in this case for imposition of a separate penalty under Section 78 of the Finance Act, 1994. Tribunal also takes note of the fact that the subsequent amendment to the Act has made the penalties under Sections 76 and 78 mutually exclusive. Accordingly, penalty imposed on the appellants under Section 78 of the Finance Act, 1994 is set aside and the appellants are directed to pay the interest amount on the delayed payment of the tax forthwith as undertaken by ld. Advocate. Thus the appeal is allowed in the above terms.

Decision:-Appeal allowed on terms.

Comment:- The essence of the case is that simultaneous imposition of penalties under section 76 & 78 of the Finance Act is not tenable in view of the specific amendment made.

Comments

PJ/Case Law/2013-14/1860

Post a Comment

Query