PENINSULA SECURITY SERVICES Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) IN this case, the Adjudicating authority dropped proceedings for imposition of penalty under Sections 76 and 78 of the Finance Act, 1994 on the ground that the service tax liability had been discharged together with interest prior to the issue of the show -cause notice. In revision, the Commissioner imposed a penalty of Rs. 1,24,607 in terms of Section 76, together with penalty of Rs. 1,000 under Section 77. Hence this appeal.

(2.) I have heard both sides. While I do not find any merit in the submission of the appellants that no penalty can be imposed under Section 76 for the reason that have not made out a case that there was reasonable cause for failure to pay tax. I see merit in the submission that penalty cannot exceed the amount of service tax payable, as per the proviso to Section 76 itself. I, therefore, restrict the penalty to Rs. 21,079 which is the admitted service tax liability of the appellants. Regarding penalty under Section 77, it is required to be upheld for the reason that the assessees did not file ST -3 Returns within the time -limit prescribed under the Act.