Per Mathew John:
1. In this case, the appellants are providing service of repair and
maintenance for Indian Railways. They did not pay service tax on the value of such services for the period July 03 to March 06 because they were not aware that service tax has to be paid even for the services rendered to the Railways. When they came to know that there is service tax liability, they took service tax registration and paid tax regularly from April 2006. Even for the prior period from July 03 to March 06, they on their own initiative paid the service tax along with interest. Thereafter, Revenue issued a show cause notice demanding tax and proposing to confirm the demand for tax and also to impose penalty under section 78 of the Finance Act.
2. The matter was adjudicated and adjudicating authority imposed a penalty of Rs. 5,000/-under Section 78. This adjudication order was not contested by either side. After about two years, the Commissioner invoked power under section 84 of Finance Act, 1994 and proposed to change the adjudication order on the ground that the adjudicating officer should have imposed penalty equal to the tax evaded and the lower amount of penalty of Rs. 5,000/- is not legal and proper. The appellants sought 15 days time for giving reply to the show cause notice which was not granted and Commissioner went ahead with adjudication imposing penalty equal to the tax evaded.
3. The submission of the appellant is that this is a case where they paid tax on their own and they should have been given the benefit under section 80 of the Finance Act, 1994. Instead the adjudicating authority imposed a small penalty of Rs. 5,000/-. Because it was a small penalty, they did not contest the matter further. The contention of the appellants is that in the facts of the case, it is too harash to impose penalty equal to the duty when the tax was actually paid but with some delay.
4. The learned AR appearing for Revenue is pressing on the fact that the adjudicating authority has no power to impose any penalty less than the tax evaded and therefore, the order of the original authority was not legal and proper and Commissioner (Appeals) has correctly exercised the power under section 84 to correct this error in the adjudicating order. Therefore the impugned order is maintainable.
5. I have considered arguments of both sides. Service tax on maintenance and repair was introduced from 2003 onwards and there has been many disputes about the applicability of the service in different circumstances. Considering the conduct of the appellant by coming forward to pay the service tax, though after some time, this was a case for full waiver of the penalty invoking the provisions of section 80. The Tribunal has given such relief in similar cases.
6. The adjudicating authority has chosen to impose a small penalty which may not be a legally correct order. At the same time, I am of the view that the Commissioner should not have exercised the revisionary power under Section 84 of Finance Act, for imposing higher penalty after almost two years of the issue of order. The original adjudication order was issued on 23.9.08. The show cause notice for revision under Section 84 was issued on 13.8.10 and the impugned order is passed on 22.9.2010. It is apparent that he has issued the order without giving fair opportunity for hearing just to meet the deadline of two years. In the facts and circumstances of the case, I hold that the impugned order is not maintainable.
7. Since the appellants have not come in appeal against the original adjudicating order, no relief is being ordered in the matter of penalty imposed in the adjudication order.
8. The appeal is allowed as above.