TMI Blog2007 (10) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorities ordered levy of interest on the tax amount and have also imposed penalties of Rs. 200/- per day under Section 76 of the Finance Act, 1994 and Rs. 1,000/- under Section 77 of the Act. The party has since paid the interest also. In the present appeal, they concede tax and interest liabilities. Their only grievance is against the penalties. 2. After hearing both sides and considering their submissions, I note that the company had instituted proceedings before the Board for Industrial and Financial Reconstruction (BIFR, for short) under the Sick Industrial Companies (Special provisions) Act, 1985 (SICA for short) in the year 2001 and that the Board declared them sick under Section 3 (l)(o) of the said Act as on 31-12-2000 as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 457 (Tri. - Chennai) = 2005 (180) E.L.T. 107 (Tri.)], wherein a penalty imposed under Section 76 of the Finance Act, 1994 was reduced in the facts and circumstances of the case and a penalty imposed under Section 77 was sustained 3. After giving careful consideration to the submissions, I note that the question whether the assessee having been declared a sick industry by BIFR should be exonerated from penal liability was not before the Tribunal in the case of Sree Vadivambigai Textile Mills (supra). In that case, the question was whether the Revenue should be lenient towards such an industry in demanding interest on service tax under Section 75 of the Finance Act, 1994. Neither of these questions arose in the case of Inma Inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal. If that be so, they were aware of their statutory liability to file return with the competent authority and pay the service tax self- assessed. Insofar as non-filing of return is concerned, there can be no excuse based on financial constraints. Therefore, the question of not imposing penalty of Rs.1,000/- under Section 77 of the Finance Act on the appellants for their failure to file service tax return is ruled out. 5. However, payment of service tax requires money. It is on record that the appellant-company was declared sick with effect from 31-12-2000 by BIER and that the relevant rehabilitation scheme is under execution. Apparently, during the period of dispute, the company was 'sick' in terms of Section 3(1)(o) of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown that they paid the tax as also interest thereon for the period of delay of payment of tax. The legislative intent behind Section 80 has to be reckoned in this background. That provision says that, where a person liable to pay service tax proves that he failed to pay tax for a certain period for sufficient cause, he shall be exonerated from penalty under Section 76. In the present case, the order of BIER constitutes proof of the 'sickness' of the company in terms of Section 3 (1)(o) of SICA for the period of dispute (2002-03) and, therefore, it has to be held that sufficient cause has been shown by the appellants for not having been able to pay service tax in time. In the result, the appellants are entitled to the benefit of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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