Full Judgment
Accordingly, I have heard Shri J.R. Madhiam, ld. JDR, for the Revenue.
2. The short point required to be decided in the present appeal is as to whether the assessee is liable to penalty under the provisions of Sections 76 and 77 of Finance Act, 1994 when originally the service tax was not being paid by them in terms of the Hon'ble Supreme Court's judgment in the case of M/s. Laghu Udyog [1999 (112) E.L.T. 365 (S.C.) = 1999 (33) RLT 911 (S.C.)], which subsequently was paid by them along with interest on revalidation of the Act. The Commissioner (Appeals) while setting aside the personal penalty has observed as tinder :- "4. I have carefully gone through the records and submissions of the appellant. So far as the confirmation of the service tax of Rs. 12,571/- vide order-in-original is concerned there is no dispute and the appellants have paid it along with interest. But, as far as the penalties under Sections 76 and 77 of Finance Act, 1994 are concerned, the legal position has very clearly been laid down in explanation to the Section 117 of the Finance Act, 2000 which reads as under : 'Explanation. - For removal of doubts, it is hereby declared that no act or omission on the part of any person shall be punishable as an offence which would not have been so punishable if this section had not come into force.' Before the above validation provisions under Section 117 of Finance Act, 2000, the appellant were not liable for any penalty under the provisions of Sections 76 and 77 of the Finance Act, 1994 in the light of the judgment of Hon'ble Supreme Court in the case of Laghu Udyog Bharati v. U.O.I. [1999 (112) E.L.T. 365], which quashed the Sub-rule 2(d)(xii) and (xvii) of the Service Tax Rules, 1994, Therefore, even though the tax liability has been fastened on the appellant by the revalidation provisions yet in terms of the explanation above, they are not liable for penal action. In fact, in a case of similar nature relating to M/s. Anil Chemical & Industries Ltd. v. Commissioner of Central Excise, Raipur [2002 (146) E.L.T. 147 (Tri - Del.), Hon'ble Tribunal granted relief to the appellant.
5. In the light of above, the imposition of penalties cannot be sustained and accordingly, I set aside that part of the impugned order of the Assistant Commissioner, and allow the appeal." 3. The Revenue in their memo of appeal has merely contended that the penalty is imposable and the Tribunal's judgment is not applicable as it has not laid down any legal proposition. However, I am of the view that the service tax was not paid at the relevant time as there was a judgment of the Hon'ble Supreme Court in favour of the respondents. It is only subsequently on account of retrospective amendment of the provisions, service tax become payable, which the assessee has paid along with interest. In the circumstances, no infirmity is found in the views taken by the Commissioner (Appeals). Revenue's appeal is accordingly rejected.