By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
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Whether penalty levied u/s. 76 can be reduced by invoking section 80?
Facts:
Since the respondents delayed the payment of service tax, adjudicating authority levied penalty u/s. 76 of the Finance Act, 1994. Being aggrieved, the assessee preferred an appeal before Commissioner (Appeals) who reduced the penalty by invoking provisions of section 80 of the Finance Act, 1994. The matter was appealed by revenue before the Tribunal, but they did not succeed. According to the revenue, it was mandatory to impose penalty u/s. 76 and discretionary powers to reduce penalty was not vested with the authority and neither the Commissioner (Appeals) nor the Tribunal were justified in reducing the penalty. Further to support its contestation, Revenue placed reliance on the decision of the Gujarat High Court in the case of Commissioner, Central Excise & Customs vs. Port Officer 2010 (19) S.T.R. 641 (Guj.).
Held:
Relying on the decision of the Gujarat High Court in case of Commissioner, Central Excise & Customs vs. Port Officer (supra) it was held that in case it is proved by the assessee that there was reasonable cause for failure, penalties may not be levied vide section 76 read with section 80 of the Finance Act, 1994. Accordingly, though discretionary powers are granted, the powers are restricted to waive off the total penalty and penalties cannot be reduced below the minimum limit prescribed u/s. 76. Therefore, the appeal was allowed and the Tribunal was directed to decide the matter afresh in light of the said decision after providing an opportunity of being heard to the assessee.
