In view of the decision of the Gujarat High Court, that no discretion is vested in the authority to levy a penalty below the minimum prescribed limit, it is held that penalty imposed under Section 76 cannot be reduced by invoking the provisions of Section 80 of the Finance Act, 1994 – Penalty has to be either the quantum imposed under Section 76 or Nil if reasonable cause is shown – Penalty under Section 76 of the Finance Act, 1994 by original authority is restored.
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH, AHMEDABAD
Appeal No. ST/315 of 2009
Arising out of Order-in-Appeal No.407/(353)RAJ/2009/Commissioner(A)/RAJ Dated: 11.5.2009
Passed by the Commissioner (Appeals) Central Excise & Cus. Rajkot
Date of Decision: 1.2.2011
COMMISSIONER OF CENTRAL EXCISE
M/s BHAWANI ENTERPRISES
Appellant Rep by: Shri S K Mall, SDR
Respondent Rep by: None
CORAM: B S V Murthy, Member (T)
Per: B S V Murthy:
Brief facts of the case are that M/s. Bhawani Enterprises (hereinafter referred as Bhawani for short) is engaged in providing “Manpower Recruitment Services”. There was delay in payment of service tax during the period from October 2006 to December 2006 and January 2007 to March 2007 and ST-3 returns for the period from October 2006 to March 2007 were filed late. A show cause notice was issued on 22.5.2008 which culminated into adjudicating order dated 18.11.2008 resulting In imposition of penalty of Rs.44,600/- under Section 76 of the Finance Act, 1994 for late payment of service tax and penalty of Rs.1000/- under Section 77 of Finance Act, 1994 for late filing of ST-3 returns. On an appeal filed by Bhawani, Commissioner (Appeals) in his order in appeal dated 11.05.2009, reduced the penalty under Section 76 to Rs.10,000/-by invoking Section 80 of Finance Act, 1994. Against this decision, Commissioner of Central Excise Rajkot filed an appeal before the Tribunal which was rejected. Thereafter, the Revenue filed a tax appeal before the Hon’ble Gujarat High Court and the Hon’ble High Court set-aside the order of this Tribunal rejecting the appeal filed by the Revenue dated 23.10.2009 and remanded the matter to decide the issue afresh with following observation :-
“9. This Court in the Tax Appeal No.1367 of 2009 has taken the view that 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. This Court has, therefore, answered the question accordingly in the negative and the said tax appeal was disposed of.”
2. The matter was accordingly listed and notice was sent to Bhawani also but no one has appeared on their behalf. Heard the learned DR.
3. This Tribunal while passing the order on 23.10.2009, rejected the appeal filed by the Revenue and had decided the issue on the basis of precedent decision of this Tribunal. In view of the fact that Hon’ble High Court has laid down the law that under Section 80 of Finance Act, 1994, penalty can be either waived or imposed as per law but there is no provision to reduce it, the appeal filed by the Revenue has to succeed. In this case, the penalty was reduced from Rs.44,600/- to Rs.10,000/- but as per Section 76 of Finance Act, 1994, penalty has to be either Rs.44,600/- or Nil, if it is considered that Bhawani had shown reasonable cause and therefore, discretion to waive penalty could be exercised. In this case, only Revenue is in appeal against the order of Commissioner (Appeals) and Bhawani has not filed any appeal. Therefore, I cannot go into the question as to whether penalty is to be reduced to nil, since there is no appeal by Bhawani and the appellant, Revenue cannot be put in a worse situation than the one as per the Commissioner (Appeals) order. Under these circumstances, the appeal filed by appellant is to be allowed and penalties imposed by original adjudicating authority are to be restored and impugned order passed by Commissioner (Appeals) is to be set-aside and I do so.
(Pronounced in the Court on 1.2.2011)