TMI Blog2021 (4) TMI 649X X X X Extracts X X X X X X X X Extracts X X X X ..... . There are no reason why the said benefit cannot be extended to the penalty imposed under Section 76, since both the Sections are to be read along with Section 80, which gives an overriding effect over Sections 76 to 78. The impugned order passed by the Tribunal which denied the said benefit to the petitioner qua the penalty imposed under Section 78 to the tune of 1,00,000/-, is therefore a gross injustice and deserve ₹ to be set aside on account of non-consideration of Section 80 of the Act. No doubt penalty can be imposed under the Act, for contravention of the law, if law provides and no mens rea need to be established, the effect of Section 80, has been completely overlooked - Penalty set aside - petition allowed - decided in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms, photo frames, albums etc. are available for sale. Admittedly, the appellant is liable to pay Service Tax and accordingly file the ST-3 return for the period of 01/04/2003 to 30/09/2003, the appellant disclosed receipt of an amount and paid Service Tax. He was served with summons, seeking information whether service tax is paid on entire amount of invoice. 5. The appellant was visited with a Show Cause Notice on 17/03/2005 by the Deputy Commissioner of Central Excise, Service Tax, Panaji. A duty of 9,05,523/- was alleged to ₹ be not paid on the material sold during the rendering of service and the said amount was demanded under Section 68 r/w. Section 73(1) of the Finance Act along with interest imposed under Section 75 and also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f goods/ material consumed in rendering of photography service cannot be included in the taxable value. The Tribunal was therefore satisfied that there was a reasonable ground for believing that the assessee was not liable to pay service tax on the cost of such materials. Convinced that there was no intention to evade the payment of tax and laying of reasonable ground for the belief, the appellant succeeded and the penalty levied under Section 78 was set aside. 7. This benefit however was not granted while determining the validity of the penalty imposed under Section 76. Section 76 of the Act reads that: Any person, liable to pay service tax in accordance with the provisions of section 68 or the rules made under this Chapter, who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the failure, contemplated under the foregoing Sections. The necessary ingredients of the said Section being, demonstrating a reasonable cause for the assessee not to pay the tax. This would necessarily cover and contemplate an honest plea founded upon reasonable grounds of existence of state of circumstances, assuming them to be true and it is for the adjudicating authority to then determine whether the grounds cited is the substance of foundation and on satisfied that there exists such a foundation, penalty may not be imposed. 10. As far as the present case is concerned, the case of the appellant is that he had a bonafide belief that for the purpose of Section 67 of the Finance Act the value of services in relation to the photography w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect that he was not liable to pay the service tax on cost of such material. The benefit of this belief for him is receiving a favourable consideration at the instance of the Tribunal while granting the relief qua the penalty imposed under Section 78. We see no reason why the said benefit cannot be extended to the penalty imposed under Section 76, since both the Sections are to be read along with Section 80, which gives an overriding effect over Sections 76 to 78. The impugned order passed by the Tribunal which denied the said benefit to the petitioner qua the penalty imposed under Section 78 to the tune of 1,00,000/-, is therefore a gross injustice and deserve ₹ to be set aside on account of non-consideration of Section 80 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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