1. The appellant filed this appeal against the impugned order. In the present appeal, the only challenge is regarding imposition of penalty under Section 78 of Finance Act, 1994.
2. The appellants were providing outdoor catering service and Service Tax was levied on outdoor caterer with effect from 10.9.04. In the month of August 2005, summons were issued to the appellant and the appellant immediately got registered as outdoor caterer with the Revenue and also paid the Service Tax of Rs. 4,13,800/- immediately along with interest and also paid amount of Rs. 2000/- as penalty under Section 77 of the Finance Act. The adjudicating authority confirmed the demand and imposed penalty of Rs. 2000/- under Section 77 and also imposed penalty of Rs. 41,300/- under Section 76 of the Finance Act. A penalty of the equal amount of Service Tax was imposed under Section 78 of Finance Act.
3. The contention is that penalty under Section 78 only be imposed in case of Service Tax has not been paid by reason, fraud or collusion or wilful mis-statement or suppression of facts or contravention of any provision or act with intent to evade payment of duty. The contention of the applicant is that in the show-cause notice, only allegation is that appellants contravened the provisions of Finance Act and Rules.
The appellants submitted that as the levy on outdoor caterer was first time levied with effect from 10.9.04, therefore, being new levy the appellants were not aware of the levy and when Revenue pointed out they immediately paid the amount of Service Tax along with interest. The appellant contention is that Section 80 of the Finance Act provided that notwithstanding any point in the provisions of Section 76 and 77 or Section 78, no penalty shall be imposable on the assessee for any failure referred to any other provision if the assessee proves that there was reasonable cause for the said failure.
4. The contention of the Revenue is that as the appellant had not paid Service Tax as per the provisions of Act and Rules, therefore, they are liable for penalty under Section 78 of Finance Act.
5. I find that the Service Tax on outdoor catering Service was introduced on 10.9.04 and first time the appellants were summoned in the month of August 2005 immediately the appellant paid the amount of Service Tax along with interest and penalty of Rs. 2000/- for (Sic) filing of returns and non-taking of registration. The provisions of Section 78 provides that penalty in case Service Tax is not paid by way of fraud, suppression of facts, collusion or wilful misstatement the section also provided that the penalty is imposable in case of contravention of any provision with intent to evade payment of duty.
Further Section 80 of the Act provides that provisions of Section 78 will not be applicable where the assessee prove that there was reasonable cause or the said failure. In the present case, as the Service Tax was levied on outdoor catering service only with effect from 10.9.04, therefore, it cannot be said that appellant's action or inaction is with intent to evade payment of duty. In these circumstances, and in view of the Section 80 of the Finance Act as the appellant has shown reasonable cause for not taking the registration or not filing the returns, therefore, the penalty imposed under Section 78 is not sustainable hence set aside. The appeal is disposed of as indicated above.