A plain reading of Section 76 of the Act indicates that a person who is liable to pay service tax and who has failed to pay such tax is under an obligation to pay, in addition to the tax so payable and interest on such tax, a penalty for such failure. The quantum of penalty has been specified in the provision by laying down the minimum and the maximum limits with a further cap in so far as the maximum limit is concerned.
Hence, Section 76 of the Act as it stands does not give any discretion to the authority to reduce the penalty below the minimum prescribed. Therefore, even on a conjoint reading of Sections 76 and 80 of the Act it is not possible to envisage a discretion as being vested in the authority to levy a penalty below the minimum prescribed limit. If the authority imposing the penalty is not entitled to levy below the minimum prescribed the appellate authority and the Tribunal cannot read the provision so as being vested with such powers, namely, to reduce the penalty below the minimum prescribed.
IN THE HIGH COURT OF GUJARAT
AT AHMEDABAD
TAX APPEAL No. 1367 of 2009
COMMISSIONER, CENTRAL EXCISE & CUSTOMS
Vs
PORT OFFICER
Dated: July 8, 2010
JUDGEMENT
Per: D A Mehta:
This appeal has been preferred by appellant-revenue challenging order dated 26.12.2008 made by Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Ahmedabad (the Tribunal) proposing following question of law:
“Whether the penalty under Section 76 of the Finance Act, 1994 can be reduced below the limit prescribed by the section?”
On 06.05.2010, when the appeal came up for hearing, following order came to be made by the Court:
