1. The assessees challenge the penalty of Rs.1,90,696/- imposed under the provisions of Section 76 of the Finance Act, 1994. The period of dispute is Apr.-06 to Sept.-06.
2. I have heard both sides. The plea of the assessees for reworking out of the penalty for the reason that penalty at the rate of 2% has been wrongly applied for the entire period to arrive at the quantum of penalty while liability to penalty arises only if the assessees do not pay even after receipt of the service tax from their clients. The assessees collected service tax from their customers only during the period from Oct.-06 to Oct.-07 and, therefore, they rightly submit that penalty requires to be recalculated as every day rate has been applied by the authorities below, right from Oct.-06. In these circumstances, I set aside the impugned order only insofar as it relates to penalty under Section 76 and direct reworking of the penalty amount in the light of the fact that the entire amount of service tax was not collected from their customers in April, 2006 but was staggered from Oct.-06 to Oct.-07. Fresh order shall be passed after extending a reasonable opportunity to the assessees of being heard in their defence.
The appeal is thus allowed by way of remand.