CESTAT, KOLKATA BENCH: SERVICE TAX PENALTY CANNOT BE IMPOSED U/S. 76 AND 78 SIMULTANEOUSLY (In favour of assessee)

In its judgment dated 27^th July 2012 CESTAT, KOLKATA BENCH in the case of Commissioner of Central Excise vs. Mittal Technopack (P.) Ltd. held that penalty u/s 76 shall not be imposed if penalty u/s 78 has already been imposed.

Issue for Consideration

The issue arises here for consideration is that whether the penalty u/s 76 of service tax can be imposed if penalty u/s 78 has already been imposed.

Facts of the case

• The appellant had rendered services under the heading ‘Business Auxiliary Service’ but failed to discharge the Service Tax during the period from 1/4/07 to 31/3/2008.

• But he has paid the entire amount of Service Tax has been paid by the applicant before issuance of show cause notice i.e. on 13/2/2009.

• The show cause notice was issued to them on 28/10/2009. Penalty has been proposed under Section 76 and 78 of the Finance Act, 1994.

• The Adjudicating Authority confirmed the demand and imposed penalty equivalent to Service Tax under Section 78 of the Finance Act 1994 only.

• Aggrieved, the Revenue filed the appeal before the Commissioner of Central Excise (Appeals) submitted that both the Lower authorities has erred in not imposing the penalty under 76 of the Finance Act.

• The Commissioner (Appeal) dismissed the appeal filed by the Revenue and upheld the order in original of the Lower Authority.

Observation of the ld. Commissioner (Appeal)

Commissioner (Appeal) dismissed the appeal filed by the Revenue for levy of both penalty u/s 76 and 78 of the act and held that penalty u/s 76 shall not be imposed if penalty u/s 78 has already been imposed relying on the judgment of:-

    
    Hon’ble Tribunal’s in the case of The Financers v. CCE [2007] 8 STR 7 (T) (2007-TIOL- 1778-CESTAT-DEL) wherein it has been held that “Double penalty under section 76 not impassable in cases where penalty imposed under section 78 ibid for suppression”. The present case is no different Therefore, I find that simultaneous imposition of both penalties is double punishment to the appellant and thus not justified”.

Hon’ble High Court of Punjab and Haryana in the case of First Flight Courier Ltd. wherein it has been held that penalty has been levied under section 78 could be taken into account for levying or not levying penalty under section 76 of the Act and penalty equal to service tax had already been imposed under section 78 of the Act.


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