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2010 (1) TMI 129 - AT - Service TaxPenalty for late payment of service tax - GTA service - officers visited the premises of respondents on 3.4.07 and noticed that the respondents have been availing the services of goods transport agency for receipt of their inputs and despatch of final products and in respect of freight paid by them, they have not discharged service tax liability. Service tax involved amounting to Rs.50,328/-, Rs.13829/- and Rs.1,226/-, in respect of unit I, Unit II and Engineering Division respectively have been paid along with interest before issue of show cause notice. Show cause notice was issued on 24.4.08 and original authority in addition to confirming the demand of service tax and interest already paid, imposed equal amounts as penalties under Section 76 and also equal amounts as penalties under Section 78 on each of the above units. In addition, he has also imposed a penalty of Rs.10,000/- on each of the units as late fee – Commissioner (appeals) dropped penalty imposed under Section 76 of the Finance Act, 1994 and taking note of the fact that the entire amount of service tax and interest was paid before issue of show cause notice reduced the penalties imposed under Section 78 to 25% of the penalties imposed on each of the units. Held that: Commissioner (Appeals) reduced the penalties under 78 to the extent of 25% of service tax involved and also set aside the penalties under Section 76 and the decision by him cannot be held unreasonable. Unlike in the case of Central Excise Act, the penalties imposable under Section 76, Section 78 of Finance Act, 1994 are not mandatory in as much as the same are to be moderated in terms of Section 80 of the Finance Act, wherever necessary. – decided in favor of assessee
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