Bookmarks   Feedback   Annual Subscription   New User   Login  
Tax Management India .com   
   TMI - Tax Management India. Com   
Cenvat credit on water treatment plant    *    India US Strategic and Commercial Dialogue    *    Comments/suggestions invited for draft Notification for amendment of Courier Imports and Exports (Clearance) Regulations, 1998 and draft Form Courier Shipping Bill-V    *    TDS u/s 195 - P.E. in India - The payments made by assessee to Gensler-USA were merely for project specific drawings & designs without transfer of technology or know-how or even title in drawing & designs - not in the nature of “Royalty” or “Fee for Technical Services”. - Tri    *    Addition relating to trade creditors - additions u/s 68 - in view of the categorical finding that the loan amounts were not reflected in the returns of the 37 persons in question, we do not see how the High Court could have taken the above view and remanded the matter to the AO - SC    *    The fact remains that the property was settled by way of family arrangement for convenient enjoyment and the property remains with assessee’s son and daughter. Therefore, the exemption u/s 54F/54 cannot be denied - Tri    *    Reopening of assessment - the information was available only in the valuation report. Giving the information in this manner shall be of no help to the appellant as the Assessing Officer was not expected to go through the said information available in the valuation report for the purpose of ascertaining the actual construction of the plot - SC    *    Addition u/s 68 - the amount of loan which has been returned to the respective creditors and interest paid thereon cannot be taxed in the hands of the assessee as its income. - Tri    *    Guidelines on safety and security of premises where imported or export goods are loaded, unloaded, handled or stored    *    After GST - Machinery booking on commission    *    Excise Cenvat credit on Electricity Power bill    *    LTC exemption for travelling to Sri Lanka    *    Applicability Of Service tax on Liquidated Damages    *    WITH GST CONSTITUTIONAL AMENDMENTS, WHAT NEXT ?    *    Companies Act, 2013-25 Key Highlights    *    status foodgrain pulses and oilseed    *    Service tax exemption for transportation of life saving medicines    *    Goods and GST Bill passed    *    CENVAT CREDIT    *    Employees sent on deputation to subsidiary/ associate companies (Service Tax)
Article Section
Home Articles Service Tax Dr. Sanjiv Agarwal
← Previous Next →


Submit New Article

Discuss this article

By: Dr. Sanjiv Agarwal
September 30, 2011
  • Article

In any event, once penalty is imposed under Section 78 of the Finance  Act, 1994 no penalty can be imposed under Section 76 of the Act since failure to pay tax cannot once again be subjected to penalty under Section 78 of the Act which is specifically in respect of penalty for intention to evade payment of service tax or suppression or concealment of the value of taxable services or for furnishing inaccurate value of services. Finance Act, 2007 had inserted a proviso in section 78 w.e.f. 10.05.2008 to the effect that if the penalty is payable under section 78, the provision of section 76 shall not apply. Also, in cases where no tax liability arises, the question of levy of any of the penalties in question would not arise.

Hon’ble Tribunal in the Opus Media & Entertainment vs CCE, Jaipur (2007 -TMI - 2921 - CESTAT, NEW DELHI) and The Financers vs CCE, Jaipur (2008 -TMI - 4599 - CESTAT, NEW DELHI) has been very clearly held that cases in which penalty are imposed under Section 78 cannot fall in respect of the same service tax evaded under Section 76. There is no scope for imposing double penalty, both under Sections 76 and 78 for the same offence. It has to fall either under Section 76 or 78 and mens rea will have to be proved Levy of penalties u/s 76 and 78 is contrary to the statutory provisions.

The penalty cannot be imposed both under Section 76 and 78 of the Finance Act as it is the clear intention of the legislature that they do not want penalty to be imposed under both the Sections. It is stated  that the proviso to Section 78 of the Act, as introduced vide Finance Act, 2008 w.e.f. 10.05.2008, clearly provides that penalty under Section 76 shall not be imposed if it has been imposed under Section 78.

In CCE v.First Flight courier Ltd. (2011) 22 STR 622 (P & H), High Court held that penalty u/s 76 is not justified if penalty under section 78 is imposed. It held, thus as under section 76 provides for penalty for failure to pay the amount while Section 78 provides for penalty for sup­pressing the taxable value. Section 78 is, thus, more comprehensive and provides for higher amount. Even if technically, the scope of Sections 76 and 78 is differ­ent, penalty under Section 76 may not be justified if penalty had already been imposed under Section 78. The matter was considered by this Court in STA No. 13 of 2010 (Commissioner of Central Excise v. Mis. Pannu Property Dealers, Ludhiana) decided on 12-7-2010, wherein it was observed :-

"We are of the view that even if technically, scope of sections 76 and 78 of the Act may be different, as submitted on behalf of the revenue, the fact that penalty has been levied under section 78 could be taken into account for levying or not levying penalty under section 76 of the Act. In such situation, even if reasoning given by the appellate authority that if penalty under section 78 of the Act was imposed, penalty under section 76 of the Act could never be imposed may not be correct, the appellate authority was within its jurisdiction not to levy penalty under section 76 of the Act having regard to the fact that penalty equal to service tax had already been imposed under section 78 of the Act. This thinking was also in consonance with the amendment now incorporated though the said amendment may not have been applicable at the relevant time."

It has been held in Desert Inn Ltd. v. CCE, Jaipur (2011) 23 STR 234 (Cestat, New Delhi) that once penalty under section 78 has been imposed, penalty under section 76 further is not maintainable. [Also see K.P. Pouches Pvt. Ltd. v. Union of India (2008 -TMI - 30328 – (HIGH COURT OF DELHI)].

In CCE, Chandigarh v. Krishna Automobiles (2011) 23 STR 54 (Cestat, Delhi), it was held that since section 58 w.e.f 10.5.2008 provide expressly that penalties under sections 76 and 78 are not imposable at same time for same offence, there was no reason to impose both penalties, even for period prior to 10.5.2008. [Also see Ideal Security v. CCE, Allahabad (2011) 23 STR 66 (Cestat, Delhi); CCE, Aurangabad v. Pendharkar Constructions (2011) 23 STR 75 (Cestat, Mumbai); CCE, Trichy v. Home Fashion International (2011) 22 STR 653 (Cestat, Chennai)]. 

Reliance can also be placed  on the following cases wherein it is held that imposition of penalty under Section 76 and 78 would amount to double penalty:

(i)                  Assistant Commissioner of Central Excise v. Krishna Poduval, 2005 -TMI - 75949 – (Kerala High Court)

(ii)                Opus Media and Entertainment v. Commissioner of Central Excise, Jaipur, 2007 -TMI - 2921 – (CESTAT, NEW DELHI)

(iii)               Real Mathematic Classes v. Commissioner of Central Excise, Jaipur, 2008 -TMI - 4417 – (CESTAT NEW DELHI)

(iv)              Commissioner of Central Excise v. Planners India Pvt. Ltd., 2006 (4) STR (Cestat, Delhi)The Financers v. Commissioner of Central Excise, Jaipur, 2007 (8) STR 7 (Cestat, Delhi)

(v)               Remac Marketing Pvt Ltd v. Commissioner of Service Tax, Kolkata, 2008 -TMI - 32394 – (CESTAT, KOLKATA)

(vi)              M/s AR AS PV PV Motors Erode (P) Ltd. v. CCE, Salem, 2010 -TMI - 77459 – (CESTAT, CHENNAI)

(vii)            The Financers v. Commissioner of Central Excise, Jaipur, 2007 (8) STR 7 (Cestat, Delhi)


= = = = = =


By: Dr. Sanjiv Agarwal - September 30, 2011



Discuss this article



← Previous Next →
what is new what is new

Advanced Search

Latest Updates




More Options


|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map || ||

© [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version