September 2011
Penalty — No proposition in SCN for penalty u/s.78 — No opportunity of rebuttal granted to the appellants to defend the penalty imposed — SCN gives rise to civil and penal consequences — Penalty set aside. Penalty — Board’s Circular issued to remove doubt — At the infancy stage of law, several controversies arose which could be considered as a reasonable cause for invoking section 80 of Finance Act, 1994. Demand — Education cess — Payment under wrong accounting code — Adjudicating authority to
(2011) 23 STR 145 (Tri.-Del.) — Bas Engineering (P) Ltd. v. Commissioner of Central Excise, Delhi.
Penalty — No proposition in SCN for penalty u/s.78 — No opportunity of rebuttal granted to the appellants to defend the penalty imposed — SCN gives rise to civil and penal consequences — Penalty set aside.
Facts:
The appeal was mainly concerned with the following three grievances: Imposition of penalty u/s.78 of the Finance Act, 1994 for suppressing of value of taxable service when there was no proposition for such levy in the SCN. The appellants, having discharged tax liability before the issuance of SCN, fell within the fold of section 80 of the Finance Act, 1994 as the confusion regarding the scope of levy of service tax on the business auxiliary service was a ‘reasonable cause’. The appellants had already paid the liability of education cess and the same cannot be considered as non-payment when the same is paid under a wrong code to Government treasury. The respondents submitted that the appellants came forward to deposit all the taxes only when an investigation was done and that the penalty should be imposed on the appellants for not taking registration.
Held:
The Tribunal set aside the penalty u/s.78 of the Act as the same was not proposed under the SCN. Also, the penalty u/s.76 for failure of payment of service tax was waived as the confusion with respect to scope of levy of service tax on business auxiliary services was held to be a ‘reasonable cause’. However, penalty u/s.77 of Rs.1,000 for non-registration was confirmed. Further, the adjudicating authority was asked to reconcile the returns with challans related to the relevant period for education cess paid under wrong code as the case is revenue neutral.
