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2008 (11) TMI 164 - AT - Service TaxWaiver of penalty under section 80 - Due to ignorance of law, appellant did not pay the service tax under the category of Commercial Coaching and Training . However, once the lapse was pointed out by the departmental officers, she paid the service tax along with interest even before the issue of show-cause notice. Taking these factors into account, the Original Authority dropped the penal proceedings exercising his powers under section 80 of the Finance Act, 1994. The Commissioner, Service Tax in exercise of the powers conferred on him under section 84 of the Finance Act took up revisionary proceedings and imposed the penalties held that penalty imposed appears to be very harsh and accordingly set-aside.
Issues:
1. Imposition of penalties under sections 78 and 76 of the Finance Act, 1994. 2. Applicability of the amendment under section 78 with effect from 10-5-2008. 3. Exercise of powers under sections 80 and 84 of the Finance Act. Analysis: 1. The appellant, a study center/coaching institute, failed to pay service tax under "Commercial Coaching and Training" category. The Original Authority dropped penal proceedings under section 80 of the Finance Act, considering the appellant's immediate payment of service tax and interest upon being notified of the lapse. However, the Commissioner, Service Tax imposed penalties of Rs. 2,29,830 under section 78 and Rs. 100 per day under section 76 through revisionary proceedings. 2. The appellant's representative highlighted an amendment under section 78 effective from 10-5-2008, stating that if penalty is payable under this section, section 76 penalties shall not apply. Citing the case of Majestic Mobikes (P.) Ltd. v. CST, it was argued that no penalty under section 76 could be levied once penalty under section 78 is imposed, especially when service tax liability was discharged before a show-cause notice. 3. Upon careful consideration, it was observed that the Original Authority appropriately exercised powers under section 80. The appellant promptly settled the service tax liability with interest upon notification of the lapse, making the imposition of penalties under sections 78 and 76 seem excessive. Referring to the precedent set by the Bench in Majestic Mobikes (P.) Ltd., where penalties were waived for early discharge of service tax liability, the appeal was allowed with consequential relief, leading to the disposal of both the stay and appeal in favor of the appellant.
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