Full Judgment
Per M. Veeraiyan:
This is an appeal arising out of the order in appeal No. 57(DK)ST/JPR-I/2009 dated 27.7.2009 by which the order of the original authority confirming demand of service tax amounting to Rs.58,617/- along with interest imposing penalties under Section 76, 77 and 78 of the Finance Act was confirmed. The appellant, a proprietary concern paid service tax amount on 30.6.08 along with interest and paid penalty imposed under Section 77 and 25% of penalty imposed under Section 78. The Commissioner (Appeals) has upheld the order of the original authority.
2. Learned Advocate is not disputing the service tax liability or interest liability or penalties under Section 77 and 78. He submits that the appellant is a proprietary concern and was running a small business as a service provider and was not familiar with the laws. On coming to know of the liability, they have paid the same. He submits that imposition of separate penalty under Section 76 is very harsh and may be dispensed with. The Commissioner (Appeals) and the original authority failed to use the discretion but not waiving penalty invoking section 80 of the Finance Act. He relies on the decision of the Tribunal in the case of Andhra Bank vs. C.C.E., Hyderabad reported in 2010 (96) RLTONLINE 561 wherein it has been held that while sustaining penalty under Section 78, there is no be justification to impose penalty under Section 76.
3. Learned SDR, on the other hand, relies on the decision of the Hon’ble High Court of Kerala in the case of Assistant Commissioner of Central Excise vs. Krishna Poduval reported in 2006 (1) STR 185 wherein it has been held as under:-
“11. Therefore, penalty can certainly be imposed on erring persons under both the above Sections, especially since the ingredients of the two offences are distinct and separate. Perhaps invoking powers under S. 80 of the Finance Act, the appropriate authority could have decided not to impose penalty on the assessee if the assessee proved that there was reasonable cause for the said failure in respect of one or both of the offences. However, no circumstances are either pleaded or proved for invocation of the said Section also. In any event we are not satisfied that an assessee who is guilty of suppression deserves such sympathy. As such, we are of opinion that the learned Single Judge was not correct in directing the 1st appellant to modify the demand withdrawing penalty under S. 76. Therefore, the judgment of the learned Single Judge, to the extent it directs the first appellant to modify Ext. P1 by withdrawing penalty levied under S. 76, is liable to be set aside and we do so. The cumulative result of the above findings would be that the Writ Petitions are liable to be dismissed and we do so. However, we do not make any order as to costs”.
He also relies on the decision of the Tribunal in the case of Bajaj Travels Ltd. v. C.C.E., Chandigarh reported in 2009 (16) ELT 183 (Tri-Del.).
4. I have carefully considered the submissions from both sides and perused the record. From the decision of the Honble High Court of Kerala, it is clear that the penalties under Section 76 and 78 are separately imposable. The said decision has been rendered after taking note of the fact that there was no plea for invocation of Section 80 and that there was no reasonable cause available for seeking relief under Section 80. In the present case, considering the constitution of the service provider and extent of business turnover reported by him, the plea raised for leniency under Section 80 could have been considered by the authorities below. In view of the above, I accept the plea of the appellant and set aside the separate penalty imposed under 76 of the Finance Act and allow the appeal to this extent with consequent relief as per law. But for the above, the order of the Commissioner (Appeals) is upheld.