1. This stay application is directed against Order-in-Original dated 2-2-2006. Since the issue involved in this case is in narrow compass I grant waiver of pre-deposit of penalty and take up the appeal itself for disposal with the consent of both sides.
2. The relevant facts that arise for consideration are that the appellants were holding service tax registration and were registered as commercial Training and coaching Centre and were discharging service tax liability. During the period July, 2003 to September, 2003, it appears that the appellants short paid service tax. Show cause notice was issued to the appellants demanding the short payment and also irregular availment of service tax credit. The appellants during the pendency of the proceedings deposited the entire amount of service tax and the entire amount of credit which was wrongly availed by the appellants. They also deposited the interest due on the wrongly availed credit and on the service tax short paid by them. The adjudicating authority confirmed the demand, appropriated the amount debited by the appellants and also appropriated the amount paid by the appellants as interest. In addition, he also imposed penalty of equivalent amount of Rs. 2,36,408/- on the appellants under Section 76. Hence, this appeal.
3. Learned Advocate appearing for the appellants submits that they are not challenging the service tax deposited by them, or the amount reversed by them for wrong availment of service tax credit and nor they are challenging the interest paid by them. The challenge is towards imposition of penalty on them. He draws my attention to the adjudicating authority's finding regarding bonafide error made by the appellants.
4. Learned D.R. reiterates the findings given by the adjudicating authority.
5. Considered the submissions made by both sides and perused the record. The adjudicating authority in his order-in-original has held as under: I, find that plea in this respect is in order. The lapse has occurred in the initial stage of the new levy of Service Tax on 06-7-003 and there was confusion in this regard. I also find that the assessee had admitted its mistake and rectified the mistake and thus had no mala fide intention to this effect. I, therefore, restrain from imposing any penalty for this lapse in terms of powers conferred upon me under Section 80 of the Act ibid.
It seems that the adjudicating authority had, in fact, considered that the appellants mis-understanding was bona fide and rectified on the mistake on their own and there was no mala fide on the part of the appellants to evade service tax liability. The adjudicating authority also invoked provisions of Section 80 of the Finance Act, 1994. But in order portion he imposed penalty of Rs. 2,36,408/-. It seems to me that there is some confusion on the face of the order itself, as having come to the conclusion that the appellants have no mala fide intention imposition of penalty on the appellants seems to be an error on the part of the adjudicating authority. The revenue has not produced any thing contrary to the findings of the adjudicating authority.
6. Accordingly the impugned order, inasmuch as it relates to the imposition of penalty on the appellants (for an amount of Rs. 2,36,408/-) is liable to be set aside and 1 do so. Accordingly, appeal is allowed to the extent as indicated above.