TMI Blog2019 (12) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... with interest has paid the duty before the issue of show-cause notice. Further, the original authority after considering all the evidences has confirmed the duty along with interest and also appropriated the amount of duty and interest paid by the appellant but the original authority dropped the penalty under Section 76 and 78 by exercising their discretion under Section 80 after observing that there was no mens rea on the part of the appellant not to pay the service tax. Penalty u/s 76 and 78 of FA - HELD THAT:- Once the appellant has shown the duty liability in their Books of Accounts which clearly means that there was no suppression of material fact to evade the payment of tax and non-payment was on account of financial difficulties w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Department amounting to ₹ 49,49,612/- (Rupees Forty Nine Lakhs Forty Nine Thousand Six Hundred and Twelve only). The appellant paid the tax as pointed out by the audit along with interest before the issue of show-cause notice. Thereafter, a show-cause notice dated 18/05/2011 proposing to demand service tax along with interest and also proposed to impose penalty under various provisions of the Act. After following the due process, the original authority confirmed the demand of service tax and also appropriated the service tax already paid and confirmed the demand of interest and appropriated the interest amount of ₹ 21,67,375/- (Rupees Twenty One Lakhs Sixty Seven Thousand Three Hundred and Seventy Five only) already paid by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 76 and 78 of the Act by relying upon the ratio of the judgments in the case of K.S. Murali Mohan Vs. CST, Bangalore 2011 (21) S.T.R. 512 (Tri.-Bang.) and P. Jani Co. Vs. CST, Ahmedabad 2010 (20) S.T.R. 701 (Tri.-Ahmd.). He further submitted that adjudicating authority has imposed a penalty under Section 77 of the Finance Act towards contravention of various provisions of Service Tax Act/Rules 1994. The learned counsel further submitted that prima facie appeal filed by the Department before the Commissioner (Appeals) was barred by limitation of time because as per Section 85 of the Finance Act, 1994 appeal ought to have been presented before the First Appellate Authority within three months from the date of receipt of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied upon the decision of the Karnataka High Court in the case of Commr. of Service Tax Vs. Motor World [2012] 22 taxmann.com 35 wherein it has been held in the conclusion by the Hon ble High Court in para 33 even if the ingredients stipulated in Sections 76 and 78 of the Act are established, if the assessee shows reasonable cause for such failure, then the authority has no power to impose penalty in view of Section 80 of the Act. 5. On the other hand, the learned AR defended the impugned order and submitted that the appellant failed to file the returns and also did not disclose to the Department the short payment of service tax which was detected by the Department during audit. 6. After considering t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by producing sufficient documentary evidence. In view of our discussion above, we are of the view that the ratio of the judgment relied upon by the appellant clearly establishes that no penalty is imposable under Section 76 and 78 if there is a reasonable cause for not paying the service tax as held by the Hon ble High Court of Karnataka in the case of Motor World cited supra. Consequently, we set aside the penalty imposed under Section 78 but upheld the penalty of ₹ 10,000/- (Rupees Ten Thousand only) imposed under Section 77 of the Finance Act 1994 for contravention of various provisions of Service Tax. Appeal is partly allowed. (Order Pronounced in Open Court on 14/11/2019) - - TaxTMI - TMITax - Serv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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