Service tax Penalty for late payment cannot exceed tax amount

CESTAT, NEW DELHI BENCH

S.K. Star Cable Network

V/s.

Commissioner of Central Excise

FINAL ORDER NO. ST/A/330 of 2012-CUS.

STAY ORDER NO. ST/S/435 OF 2012-CUS.

SERVICE TAX STAY NO. 2867 of 2011

SERVICE TAX APPEAL NO. 1375 of 2011

APRIL 17, 2012

ORDER

Mathew John, Technical Member – After hearing both the sides for the purpose of stay petition it was found that this is a matter of very short issue therefore the requirement of pre-deposit of dues arising from the impugned order was waived and appeal itself was taken up for disposal.

2. The appellants were providing the service of cable operators. During the period January 2004 to March 2005 they did not pay service tax as applicable. Therefore, a Show Cause Notice demanding the service tax of Rs.97,286/- not paid and also proposing penalty under Section 76, 77 and 78. The Show Cause Notice was adjudicated confirming duty demand of Rs.97,286/- and imposing penalties under Sections 77 and 78 each equal to Rs.97,286/- and also penalty under Section 77 of Rs. 1000/-. The appellants filed appeal before the Commissioner (Appeals), the Commissioner (Appeals) reduced the duty demanded to Rs. 40,131/-. He also allowed Cenvat credit amounting to Rs. 21,242/- on input services availed by the appellant from multistage operators. However, he imposed penalty equal to Rs. 40,131/- under Sections 76 and 78.

3. The submission of the Counsel is that since once Cenvat credit is allowed the net duty liability is Rs. 18,889/-. So the penalty should have been for Rs. 18,889/- only.

4. He further submits that Hon’ble Punjab & Haryana High Court in the case of CCE v. First Flight Courier Ltd. [S.T.A. No. 48 of 2010, dated 28-1-2011] has decided that there is no case for imposing penalty under Section 76 and Section 78 simultaneously. He prays that penalty under Section 76 may be waived. Further he also prays that concession of paying 25% of the penalty equal to net duty demanded may be given to him as decided by the Delhi High Court in the case of CCE v. Harish Silk Mills [2010] (255)ELT 393 (Guj.)

5. The ld. A.R. submits that penalties have been imposed because they did not pay in time the tax due. We find that there is no case for imposing penalty for an amount more than net tax liability. So the penalty under Section 78 is reduced to Rs. 18,889/-. Further, penalty under Section 76 is waived and also the appellant is given an opportunity to pay 25% of the penalty under Section 78 in 30 days of receipt of the order. If such payment is not made in such timeframe full penalty will be payable.

6. Stay petition and appeal are disposed of accordingly.

NT