[2015] 63 taxmann.com 231 (New Delhi- CESTAT) Rohan Motors vs. Commissioner Service Tax

Facts
Based on information from CERA Auditors, the Range Superintendent issued 5 letters/summons to the assessee, to submit the requisite information. Since no information was submitted the Show cause notice was issued to assessee, inter alia for imposition of penalty u/s. 77(1) of the Act for failure to furnish information/ documents. The assessee, on the other hand contended that, the department asked for repetitive information and that requisite details called for were provided by it, hence penalty u/s. 77 cannot be levied.

Held
The Tribunal noted that as per the adjudicating authority the appellant failed to respond to letters and submit desired information and therefore penalty was imposed u/s. 77(1)(c) of the Act; whereas the first appellate authority found that though information was supplied vide reply letters, it failed to submit documents and thus confirmed the penalty. Based on these contrary observations, the Tribunal expressed a view that the department itself is not sure whether the appellant is guilty of failure to furnish information or failure to produce documents. It held that, if penalty is imposed u/s. 77(1)(c)(ii), the Department has to state specifically which document was called from the appellant. The show cause notice does not specify the document that was called for. Imposition of penalty being in the nature of punishment, it cannot be imposed on flimsy and shaky evidence. It was further observed that, it is not a case where the department was obstructed from conducting a search or that a specific document was withheld resulting in particular revenue implication. Accordingly, it held that, though the appellant failed to reply to few letters, the explanation for failure that the appellant was under bona fide belief that necessary information was given cannot be rejected in toto and therefore imposition of penalty is not justified.