COMMISSIONER OF SERVICE TAX, SERVICE TAX COMMISSIONERATE, BANGALORE Vs. AK AND I ADVERTISING PRIVATE LT D

JUDGEMENT

(1.) THESE two appeals are preferred by the Revenue challenging the impugned order passed by the Tribunal setting aside the order imposing penalty by holding that when 25 per cent of the penalty imposed is paid by the assessee, the rest of the penalties imposed are unsustainable. Both the assessee availed of the benefit of service tax amnesty scheme in order to discharge the service tax liability. However, it was found that correct value of the taxable amount had not been included in the return filed by the assessees in pursuance of the amnesty scheme. There was short - levy. Therefore show -cause notice came to be issued to the assessees. However, even before the issue of show -cause notice, when the departmental officers pointed out short -levy, service tax was paid by the assessees along with interest. After appropriating the aforesaid amount paid towards duty and interest, penalty equal to the amount of duty was imposed under various sections of the Finance Act such as sections 76, 77 and 78. Aggrieved by the same, the assessees preferred an appeal to the Appellate Commissioner, who dismissed the appeal upholding the levy of penalty. Aggrieved by the same, the assessees preferred an appeal to the Tribunal The Tribunal took note of the fact that the circular issued by the Department on October 3, 2007 provides for payment of 25 per cent of the service tax as penalty within 30 days from the date of the order, which enable assessees to avail of the benefit under the aforesaid provisions. As admittedly, duty and penalty was paid even before the show -cause notice and 25 per cent of the penalty was paid within one month from the date of the order, it held that imposition of penalty under sections 76 and 77 is illegal and therefore it set aside the same. Aggrieved by the same, the Revenue is in appeal.

(2.) PROVISO to section 78 was substituted by the Finance Act, 2003, which came into effect from May 14, 2003. It reads as under : 78 Penalty for suppressing value of taxable service. -... Provided that where such service tax as determined under subsection (2) of section 73, and the interest payable thereon under section 75, is paid within thirty days from the date of communication of order of the Central Excise Officer determining such service tax, the amount of penalty liable to be paid by such person under this section shall be twenty -five per cent of the service tax so determined :

(3.) IN the instant case, the duty and interest is paid even before issue of show -cause notice and 25 per cent of service tax is paid as penalty within 30 days from the date of order determining penalty. Therefore, this proviso to section 78 clearly applies to this case. Therefore the assessing authority was not justified in raising the demand for the entire amount of penalty in pursuance of his order and the Tribunal was justified in setting aside the same and holding that penalty claimed under other provisions of the Act are illegal and consequently setting aside the same. In that view of the matter, we do not see any error committed by the Tribunal in passing the impugned order. Accordingly, the substantial question of law framed is answered in favour of the assessee and against the Revenue. Appeals are dismissed.