Commissioner of GST and Central Excise, Chennai Vs. SSI Media India Pvt. Ltd. - (Customs, Excise and Service Tax Appellate Tribunal) (26 Feb 2019)

Simultaneous penalties under Section 76 as well as 78 of Finance Act cannot be imposed

MANU/CC/0060/2019

Service Tax

The Respondents are engaged in providing advertising services by displaying the advertisement of their clients on bus back panels, bus shelters etc., after obtaining permission from MTC, TNSTC and Southern Railway. They obtained service tax registration under the category of Advertising Agency Service. During the course of audit of the accounts of the Respondents, for the period from October and November 2009, it was noticed that, the Respondents had short-paid service tax during the period from October 2008 to February 2009 and not paid service tax for the period July 2009 to October 2009. It was also noticed that, Respondent had declared lesser taxable value for the half-year ending return of 31st March, 2009.

Show cause notice was issued proposing to demand the short-paid service tax along with interest and for imposing penalties. After due process of law, the Adjudicating Authority confirmed the demand raised in the show cause notice and appropriated the said amount already paid by the Appellant along with interest and imposed penalty under Section 76 of the Finance Act, 1994 along with penalty of Rs. 5,000 under Section 77 of the Act. The Department has filed the present appeal against such order aggrieved for the failure to impose penalty under Section 78, even though the same was proposed in the show cause notice.

The Respondent has discharged the entire service tax liability along with interest before issuance of the show cause notice. Part of the amount was paid up by adjusting CENVAT credit. In para 8 of the impugned order, the Respondent has taken a plea that they defaulted in payment of service tax due to certain legal dispute between their clients. As per sub-section (3) of Section 73, when the Assessee has paid up the service tax along with interest on its own ascertainment or being point out by the officers, no penalties are required to be imposed.

In the present case, show cause notice was issued even though the Appellant had paid up the entire service tax along with interest immediately on being point out by audit. The Adjudicating Authority has imposed penalty under Section 76. After the amendment with effect from 10th May, 2008, last proviso to Section 78 states that if penalty is payable under such section, the provisions of Section 76 shall not apply. Therefore, the penalties under Sections 76 and 78 are mutually exclusive. When the Adjudicating Authority has considered and imposed penalty under Section 76, the same cannot be set aside by the Tribunal in an appeal filed by Department requesting to impose penalty under Section 78. There is no ground stated in this appeal contending that penalty imposed under Section 76 is erroneous.

The Hon'ble High Court of Gujarat in Commissioner of CGST & Central Excise Vs. Sai Consulting Engineering Ltd., has held that, simultaneous penalties under Section 76 as well as 78 of the Finance Act cannot be imposed. Simultaneous penalty under Section 76 and 78 cannot be imposed under law. When there is a penalty under Section 76, simultaneous penalty under Section 78 cannot be imposed under law. The Respondent has paid up the entire demand along with interest before issuance of show cause notice, hence further penalty under Section 78 is unwarranted. The impugned order does not call for any interference. The appeal filed by Revenue is dismissed.

Relevant : Commissioner of CGST And C. Ex. vs. Sai Consulting Engineering Pvt. Ltd. MANU/GJ/0351/2018

Tags : DEMAND PENALTY LEVY