1. The appellant challenges the order of the Commissioner dated 27.2.200, made under the provisions of Section 84 of Chapter V of the Finance Act, 1994, setting-aside the order of the Assistant Commissioner to the extent that penalties under Sections 76, 77 and 78 of the said Act were waived, and imposing penalties including the penalty of Rs. 90 lacs on the appellant under Section 78 of the said Act.
2. The adjudicating authority had confirmed the demand of service tax to the tune of Rs. 63,78,887/- and education cess of Rs. 60,274/- under Section 73 of the said Act, directed appropriation of various amounts deposited towards duty demand, confirmed a further demand of Rs. 5,35,452/- under Section 73 with a direction to appropriate various amounts paid towards that demand, ordered interest to be paid, and imposed a penalty of Rs. 20,000/- under Section 78 of the Act.
3. The appellant firm was providing services as architects. On 21.2.2005, when their premises were visited by the Revenue officers and the record verified, it transpired that service tax was short paid for the period from April 2004 to December 2004, and that even during the years 2001 to September 2003-2004 the tax was short paid. The adjudicating authority relying upon the statement of the Manager Satish Kumar recorded on 21.2.2005, that the service tax liability was not discharged because, the client had not paid the tax and that there was no intention to evade payment of tax, took a lenient view, by imposing a penalty only of Rs. 20,000/- under Section 78 of the Act on the appellant.
4. It is clear that by invoking Section 78 for imposing penalty of Rs. 20,000/-, the adjudicating authority proceeded on the footing that the appellant had suppressed or concealed the value of the taxable services with intent to evade payment of service tax. When the adjudicating authority held that, Section 78 was invokable and imposed penalty of Rs. 20,000/- under that provision, the Commissioner was perfectly justified in exercising revisional powers under Section 84 of the Act in respect of the order of imposing penalty of only Rs. 20,000/-, when the minimum prescribed under Section 78, as it then stood, could not have been less than the amount of service tax sought to be evaded and could have been imposed upto twice the amount of the service tax sought to be evaded.
5. In this context, the learned Counsel for the appellant strongly contended that, the Commissioner did not have the power to impose penalty under Section 78 of the Act, because under Section 78, as it stood at the relevant time, only the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise could impose such penalty. This contention is clearly misconceived, because the Commissioner exercising his revisional powers under Section 84 did not directly act under Section 78. By virtue of the powers conferred on him under Section 84(1), the Commissioner was empowered to make such order "as he thinks fit", after calling for the record of the proceedings under the said Chapter V of the Finance Act, 1994, under which the adjudicating authority subordinate to him had passed any decision or order. The order made under Section 78 was an order passed by an authority subordinate to the Commissioner and, therefore, he was empowered to call for the record and proceedings of that order and revise the same by making such order thereon as he thought to be fit.
The Commissioner was, therefore, empowered to enhance the penalty by exercising his powers under Section 84.
6. It was tried to be contended that the service tax amounts were paid and therefore, a lenient view should be taken. It transpires from the record that for the two crucial half-yearly periods, returns were not filed nor was the tax paid. The statement of the Manager of the appellant who was looking after the Accounts and Finances of the appellant, discloses that service tax was charged from the customers (in answer to question No. 5), that the appellant was collecting service tax, but not paying it to the department (in answer to question No. 7), and that the returns were filed only upto September 2003, but they were not filed for the half-year ending March 2004 and September 2004 (in answer to question No. 9). In answer to question No. 13, it was stated that service tax was shown separately in the bills and in some cases the fee was inclusive of the service tax. Thus, when, prima facie, service tax was collected and not paid, nor were the returns filed and the service tax was not paid as and when due, this was a proper case for enhancing the penalty under Section 78. However, having regard to the facts and circumstances of the appellant, we direct that on the appellant's depositing a sum of Rs. 10 lacs (Rupees ten lacs only) within six weeks from today there shall be waiver of the remaining amount of penalty payable under the impugned order. If the said amount is not deposited, the appeal will stand dismissed. Post the matter for compliance report on 30.10.2007. This application is disposed of accordingly.