TMI Blog2020 (2) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... of course, not on his own or suo motu but on the basis of the Audit Objection viz., on the basis of the determination by an Auditor of the Department would not take out the case of the Assessee from the ambit and scope of Section 73(3) of the Act. Therefore, the question of imposition of penalty under Section 78 of the Act on the Assessee would not arise in the present case. Unless the penalty under Section 78 of the Act itself is leviable on the Assessee, there is no question of any reduction of the quantum of penalty to 25% thereof by the learned Tribunal in its discretion. What is not at all leviable, cannot be reduced. The Assessee is entitled to get the relief in the present case and the Appeal filed by the Assessee deserves to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12.The original adjudicating authority, while confirming the demand and interest and imposing penalty had already granted the benefit of reduced penalty of 25%, provided the appellant deposits the entire service, tax, interest along with 25% penalty within a period of 30 days from the date of receipt of the order. The appellants have chosen not to exercise the option given by the Assistant Commissioner, which case, the penalty cannot be reduced at the appellate stage. 2.The learned counsel for the Assessee Mr.N.Viswanathan submitted that the Assessee in the present case had already paid the service tax which was short paid by him along with interest in the year 2013 before the issuance of the impugned Show Cause Notice under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 73(3) of the Finance Act, 1994 [in short the Act ], the Assessee had rightly paid the short levied service tax and the penalty imposed under Section 78 of the Act was impermissible on the Assessee and even the reduction of the penalty to the extent of 25% ordered by the Tribunal was not justified. 4.Per contra, the learned counsel for the Revenue Mrs.R.Hemalatha submitted that the Assessee paid the said short levied service tax only upon the Audit Objection raised in the matter and the same communicated to him, therefore, it should be construed that the Assessee had paid the said service tax, had suppressed the liability to pay the service tax initially, which only upon the Audit Objection raised, he has paid. She further submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if any, which in his opinion has not been paid by such person and, then, the [Central Excise Officer] shall proceed to recover such amount in the manner specified in this section, and the period of [thirty months] referred to in sub- section (1) shall be counted from the date of receipt of such information of payment. [Explanation.1]: For the removal of doubts, it is hereby declared that the interest under section 75 shall be payable on the amount paid by the person under this subsection and also on the amount of short payment of service tax or erroneously refunded service tax, if any, as may be determined by the [Central Excise Officer], but for this sub-section. [Explanation 2]: For the removal of doubts, it is hereby declar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art of the Assessee to pay service tax for reasons of fraud etc., as enumerated in Section 73(4) of the Act quoted above. The penalty under Section 78 of the Act is not attracted, in case the Assessee falls within the four corners of Section 73(3) of the Act. Sub-section (4) of Section 73 is non obstante to Section 73(3) of the Act. It begins with the terms Nothing contained in sub-section (3) shall apply to a case where any service tax has not been levied or paid or has been shortlevied or short-paid or erroneously refunded by reason of - (a) fraud; or (b) collusion; or (c) wilful mis-statement; or (d) suppression of facts , the Assessee has failed to pay the service tax. 9.Sub-section (3) clearly provides for a remedy to the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessee from the ambit and scope of Section 73(3) of the Act. Therefore, in our opinion, the question of imposition of penalty under Section 78 of the Act on the Assessee would not arise in the present case. 11.Unless the penalty under Section 78 of the Act itself is leviable on the Assessee, there is no question of any reduction of the quantum of penalty to 25% thereof by the learned Tribunal in its discretion. What is not at all leviable, cannot be reduced. 12.Therefore, the Assessee is entitled to get the relief in the present case and the Appeal filed by the Assessee deserves to be allowed. The same is accordingly allowed and the penalty order of original adjudicating Authority as well as that of the learned Tribunal uphold ..... X X X X Extracts X X X X X X X X Extracts X X X X
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