1. This appeal has been directed against the impugned order in appeal dated 15.11.2000 passed by the Commissioner(Appeals) vide which he had set aside the penalty imposed under Section 77 of the Finance Act, 1994 of Rs.27,500/-on the appellants.
3. The respondents failed to fill their quarterly Returns ending quarters December 1997, March 1998 and June 1998. They were accordingly saddled with the penalty of Rs.27,500/- by the Assistant Commissioner after getting their reply for the delay in filing the returns which was of 275 days. The respondents contested the correctness (sic) Assistant Commissioner dated 23.2.99 and the Commissioner(Appeals) set aside the penalty amount as imposed by the Assistant COmissioner by accepting their appeal.
5. The learned JDR has assailed the validityof the impugned order in appeal on the ground that the same had been passed in violation of the provisions of Section 77 of the Finance Act, 1944. He has argued that discretion for not imposing penalty could be exercised by the Commissioner(Appeals) only under Section 80 of the Finance Act if the sufficient cause was shown by the respondents for the delay in filing the returns. Therefore, the impugned order according to him deserves to be set aside and the matter be sent to the Commissioner(Appeals) for passing fresh order in accordance with law. He has also referred to the Tribunal's judgement in CCE Jaipur-11 Vs. Earth Tour Travels (P) Ltd. 2001(43) RLT 50.
6. On the other hand, the learned representative of the respondents has contended that the Commissioner(Appeals) had the discretion under Section 77 of the Finance Act to reduce the penalty or not to impose any penalty amount and as such the impugned order passed by him is prefectly valid. He has in support of his contention placed reliance on CCE Jaipur cs. Milan Tent Palace, 2000(43) RLT 51, Vijaya Clearing & Forwarding Agency Vs. CCE Mumbai-I, 2000(123) ELT 930(T) and Harilal & Co. Vs. CCE 2000(115) ELT 375(T).
7. Admittedly, there had been delay of 275 days on the part of the respondents in filing the returns. No doubt, they are said to had paid the service tax later on for the quarter in dispute ending December 1997, March 1998 and June 1998 alongwith the interest but still they could be proceeded against for imposition of penalty under Section 77 of the Finance Act, 1994. The said Section clearly mandates that the assessee shall become liable for payment of penalty on his failure to fill the returns in time at the minimum rate of Rs.100/- per day which may extend to Rs.200/- per day(as it stood at the relevant time). The discretion for non-imposition of penalty could be exercised by the authority only under Section 80 of the Finance Act which enacts that notwithstanding anything contained in the provisions of Sections 76 and 77 or 79, no penalty shall be imposable on the assessee's failure referred to in the said provisions, if the assessee proves that there (sic) reasonable cause for the said failure. In the instant case, the Commissioner has not exercised his power under this Section of the Finance Act, for want of indication to this effect in the impugned order. He has not recorded the findings that the respondents were prevented by sufficient cause in filing the quarterly returns for the disputed period and that he was satisfied with that cause. Therefore, his impugned order setting aside the entire penalty amount as imposed by the Assistant Commissioner on the respondents without recording any sufficient cause, cannot be legally sustained being not in consonance with the provisions of Section 77 of the Act.
8. The ratio of the law laid down in CCE Jaipur Vs. Milan Tent Palace(supra) is not attracted to the facts of the present case as in that case the provisions of Section 80 of the Finance Act were never referred or relied uponby either side representing the case. The Tribunal only took the view that the competent authority was not bound to impose the minimum penalty prescribed under Section 77 of the Act.
There is no dispute with this proposition of law as Section 80 of the Act gives power to the competent authority even not to impose any penalty in certain cases where the authority is satisfied that the assessee was prevented by sufficient casue in filing the returns in time.
9. Similarly, the ratio of the law laid down in Harilal & Co. Vs. CCE Mumbai(supra) referred by the counsel is not of any assistance to the respondents in this case. In that case the Tribunal reduced the penalty amount but before us no sufficient cause has been shown by the respresentative of the respondents for which the Commissioner exercised the discretion in not imposing any penalty amount. The Tribunal had taken the view in CCE Jaipur-II Vs.(sic) referred by the learned JDR that penalty has to be imposed on the assessee in accordance with the provisions of Section 77 of the Act. The discretion for not imposing the penalty can be exercised by the authority only under Section 80 of the Act.
10. In view of the discussion made above, the impugned order of the Commissioner(Appeals) being not legal, is set aside and the matter is sent back to him for fresh decision in accordance with law and the observations made above, after affording opportunity of hearing to both the sides.
11. The appeal of the Revenue accordingly stands allowed by way of remand.