Customs, Excise & Service Tax Appellate Tribunal (CESTAT) of the Ahmedabad bench in a recent judgement held that penalty under sections 76 & 78 of the Finance Act, 1994 when the assessee paid the entire service tax along with interest.
Sos Finance, the appellant challenged the imposition of penalties under Sections 76 & 78 on the ground that since the service tax along with interest had already been paid the case should have been closed and no penalty could have been imposed.
Shri. Jigar Shah, Counsel appeared on behalf of the appellant submitted that the adjudicating authority had rightly dropped the penalty under Sections 76 & 78 invoking Section 80 of the Finance Act, 1994, therefore, the Commissioner (Appeals) has erred in imposing a penalty.
Further contended that the Commissioner (Appeals) has imposed a penalty on the ground that since there was the suppression of fact and an extended period was invoked, the penalty under both the sections was imposable. Shri. G. Kirupanandan, who appeared on behalf of the revenue reiterates the finding of the impugned order.
In light of various judgments, a coram comprising of a penalty under Section 76 cannot be imposed when a penalty under Section 78 is imposed. Further observed that the adjudicating authority even though invoked the extended period but by invoking Section 80 set aside the penalty because the appellant had admittedly paid the entire service tax along with interest before the issuance of show cause notice.
While allowing the appeal, the Tribunal held that the adjudicating authority has rightly set aside the penalty under Sections 76 & 78 of the Finance Act, 1994 and set aside the impugned order of the Commissioner (Appeals) being not correct.
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