TMI Blog2024 (3) TMI 1289X X X X Extracts X X X X X X X X Extracts X X X X ..... se of MD ENGINEERS VERSUS C.C.E. S.T. -VADODARA-I [ 2023 (8) TMI 903 - CESTAT AHMEDABAD] wherein it was held that the appellant have been imposed penalty under section 76 and 78 simultaneously. The penalty under Section 76 and 78 cannot be imposed simultaneously. Accordingly, penalty under section 76 should not be imposed on the Appellant when they have paid the service tax along with interest whereas penalty under section 78 and other penalties is upheld. The impugned order is modified to the above extent. The appeal is partly allowed. - MR. RAMESH NAIR, MEMBER (JUDICIAL) AND MR. RAJU, MEMBER (TECHNICAL) Shri H D Dave, Advocate for the Appellant Shri Anoop Kumar Mudwel, Superintendent (AR) the Respondent ORDER The Appellant M/s. Rohan Dyes is engaged in the manufacture of Dyes and Dyes Intermediaries for which they are registered with the Central Excise Department. The Department seeks to recover service tax for the payments made by the Appellants to foreign commission agents for the period from 2003 04 to 31.12.2007. The payments so made in foreign exchange are sought to be subjected to service tax under business auxiliary services under section 65(105)(zzb) of the Finance Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of fraud or collusion or willful misstatement or suppression of facts or contravention of any of the provisions of Chapter 5 of the Finance Act or of the Rules made thereunder with the intent to evade payment of service tax. During the period in question i.e. the period from 09.07.2004 to 31.03.2006, Section 78 of the Finance Act, 1994, did not contain a further proviso, which, as noted above, which added with effect from 16.05.2008. The further proviso reads as under :- Further provided that if the penalties is payable under this section, the provisions of Section 76 shall not apply. 8. Section 76 of the Finance Act, 1994, pertains to penalty for failure to pay service tax. As it stood at the relevant time this provision provided that any person who is liable to pay service tax in accordance with the provisions of Section 68 or the Rules made under Chapter 5, but fails to pay such tax, shall pay, in addition to such tax and the interest on that tax in accordance with the provisions of Section 75, a penalty which shall not be less than one hundred rupees for every day during which such failure continues or at the rate of one per cent of such tax, per month, whichever is higher, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature of clarificatory amendment and not creating a liability for the first time. Even without the aid to this further proviso to Section 78, one entire plausible view was that the situation envisaged under Section 76 of the Finance Act, 1994, would exclude those cases covered under Section 78 of the Finance Act, 1994. In other words, Section 76 of the Finance Act, 1994, would cover only the cases of nonpayment of service tax which are not related to fraud, collusion, willful mis-statement, suppression of facts or contravention of any of the provisions of the said Chapter or the rules made thereunder with the intent to evade payment of service tax since legislature had already provided for penalty in Section 78 in such situations. Thus further proviso to Section 78 made it explicit which was till then implicit. 12. Section 76 of the Finance Act, 1994, as is now amended with effect from 14.05.2015 gives further credence to this argument. Section 76(1) as it stands after the said amendment provides that where service tax was not levied or not paid or having been short-levied or short-paid, or erroneously refunded for any reason, other than the reason of fraud or collusion or willful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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. 14. The Karnataka High Court has also taken a similar view in the case of Commissioner of Service Tax, Bangalore Vs. Motor World [2012( 27) S.T.R.225 (Kar.)] = 2012-TIOL-418-HC-KAR-ST in which in paras 17, 18 and 19 it was observed as under: 17. This decision of the Tribunal has been affirmed by this Court in the case of CCE v. Sunitha Shetty reported in 2006 (3) S.T.R. 404 (Kar.) = 2004 (174) E.L.T. 313 (Kar.) = 2004-TIOL-49-HC-KAR-ST, which has been followed by this court in the case of Commissioner of Central Excise v. Royal Agencies in CEA No.4 of 2004 dispo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n amended by the Finance Act, 2008 and the amendment provides that in case where penalty for suppressing the value of taxable service under Section 78 is imposed, the penalty for failure to pay service tax under Section 76 shall not apply. With this amendment the legal position now is that simultaneous penalties under both Section 76 and 78 of the Act would not be levied. However, since this amendment has come into force w.e.f. 16th May, 2008, it cannot have retrospective operation in the absence of any specific stipulation to this effect. Going by the nature of the amendment, it also cannot be said that this amendment is only clarificatory in nature. We may mention that Punjab and Haryana High Court in its decision dated 12th July, 2010 in STA 13/2010, entitled Commissioner of Central Excise v. M/s. Pannu Property Dealers, Ludhiana [ 2011(24) S.T.R. 173 (P*H) = 2010-TIOL-874-HC-P H-ST has taken the view that even if the scope of two sections of the Act may be different, 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. However, that was a case where the appellate authority had exercise ..... X X X X Extracts X X X X X X X X Extracts X X X X
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