Service Tax Penalty - Either 76 or 78 But Not Under Both Sections

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From: CA. Rahul Bajaj ca.rahulbajaj@gmail.com

2010-TIOL-1241-CESTAT-MAD

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL 
SOUTH ZONAL BENCH, CHENNAI

Appeal No.ST/103/2009

Arising out of Order-in-Appeal No.19/2009-(SLM)(ST) Dated : 29.1.2009 
Passed by the Commissioner of Central Excise (Appeals), Salem

Date of decision : 9.4.2010

M/s AR AS PV PV MOTORS ERODE (P) LTD

Vs

COMMISSIONER OF CENTRAL EXCISE, SALEM

Appellant Rep by: Shri M N Bharathi, Adv. 
Respondent Rep by: Shri C Rangaraju, Adv.

CORAM: Jyoti Balasundaram, VP

Service tax – Penalty – Penalty under Section 76 and 78 – Since the provisions of Section 76 and 78 are mutually exclusive, penalty under Section 76 is set aside and penalty under 78 reduced to 25% of the service tax determined.

Appeal partly allowed.

Case law referred:

1. M/s. Safe Test Enterprises Vs Commissioner of Central Excise, Salem 2010–TIOL–355- CESTAT–MAD … … … Referred (Para 1)

FINAL ORDER NO.427/10

Per: Jyoti Balasundaram:

The plea of the appellants in this appeal is that penalty under Section 76 may be set aside and that the penalty under Section 78 of the Finance Act, 1994 may be reduced in the light of the Tribunal's order in M/s. Safe Test Enterprises Vs Commissioner of Central Excise, Salem 2010–TIOL–355-CESTAT–MAD as the entire service tax amount had been paid prior to the issue of the adjudication order.

2. Heard both sides. Since the provisions of Section 76 and 78 of Chapter V of the Finance Act, 1994 are mutually exclusive, and since the assessees have paid the penalty imposed under Section 78, I set aside the penalty imposed under Section 76 of the Finance Act, 1994. As regards penalty under Section 78, I accept the contention of the assessees that they are liable to pay only 25% of the penalty for the reason that they have paid the tax and interest even prior to the issue of the adjudication order and the first proviso to Section 78 stipulates that if the tax and interest are paid within 30 days from the date of communication of the adjudication order determining the tax, the amount of penalty liable to be paid under Section 78 shall be 25% of the service tax so determined.

3. In the result, the penalty under Section 76 is set aside and the penalty under Section 78 is reduced to 25%.

4. Appeal is partly allowed as above.

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warm regards,
CA. Rahul Bajaj