1. This appeal is directed against order-in-appeal dt. 23-12-04, which upheld the order-in-original that imposed penalty on the appellants under Section 76 and 77 of the Finance Act.
2. The relevant fact that arises for consideration the appellants are holders of Service Tax Registration Certificate and are rendering services as 'Advertising Agency Services'. The appellant failed to furnish quarterly return in Form-ST-3 for the quarter ending June 1997 and also failed to pay service tax pertaining to the period from November 1996 to June 1997 within the stipulated period. The lower authority brought to the notice of the appellant that they have mpt (sic)(not) discharged the service tax liability. On being pointed out about such non-discharge of service tax liability, the appellant discharged the service tax liability and the interest thereof. Show cause notices were issued in June 1998 directing the appellant to show cause as to why penalty be not imposed on them under Section 76 and 77 of the Finance Act, 1994. The adjudicating authority after considering the contentions of the appellant, imposed a penalty of Rs. 200/- (Rupees two hundred only) under Section 77 and imposed penalty of Rs. 1,50,250/-(Rupees one lakh fifty thousand two hundred fifty only) under Section 76. On an appeal Commissioner (Appeals) also upheld the said penalties.
3. Considered the submissions made at length both sides and perused the records. It is the submission of the Ld. Consultant that the lower authority has not considered in right perspective the appellant's contention that provisions of Section 80 of the Finance Act, are invocable in this case and that provisions of Section 76 mandates the penalty to be imposed equivalent to the amount of Service Tax the appellant "failed to pay". He submits that they are not challenging the imposition of penalty of Rs. 200/- under Section 77. On perusal of the records it is seen that the Ld. Commissioner (Appeals) has not given any reason as to why the provisions of Section 80 could not have been invoked in this case. It is the fact that service tax on Advertising Agency Services was brought into statute in November 1996. The period involved in this case is November 1996 to June 1997 wherein the provisions might not have been clear of the current appellant. Further on perusal of the orders of lower authorities, it is seen that the penalty imposed for the month of November 1996 and December 1993 is more than the amount of service tax the appellant "failed to pay". The provisions of Section 76 clearly imply that the penalty cannot exceed the amount of service tax the appellant failed to pay by applying the provisions of Section 76 of the Finance Act, 1994 the penalty imposed in excess to the tax liability would be incorrect. There seems to be a (sic)(an) anomaly in imposing penalty on the appellant under the provisions of Section 76, and there being no reasoning given for non invocation of provisions of Section 80, I am unable to come to a proper conclusion in this matter is as regards the penalty imposed on the appellant under Section 76.
4. Accordingly, to my mind, the matter needs to be re-considered by the Ld. Commissioner (Appeals) as regards non-imposition of penalty under Section 76 after considering the provisions of Section 80 as the 'Advertising Agency Services' was brought into the Service Tax net, from November 1996 onwards. Since the appellant is not challenging the imposition of penalty under Section 77, the impugned order to that extent is upheld and the order to that extent which upholds imposition of penalty under Section 76 is set aside. The matter is remanded back to the Ld. Commissioner (Appeals) to reconsider the pleas of appellant as regards correct quantification of penalty and also to consider the provisions of Section 80 of the Finance Act, 1994. The Ld. Commissioner (Appeals) will grant an opportunity of personal hearing to the appellant before reaching a conclusion. The appeal is disposed off as indicated in above paragraph.