PRABHA TELE COMMUNICATION Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) THIS application for stay of the impugned order of the Commissioner (Appeals) made on 21 -4 -2005 has come before us. In this application, the applicant states that they are engaged as EPABX Operator under the licence given by the Department of Telecommunications. A demand of service tax to the tune of Rs. 1,55,000/ - was made by the department in a show cause notice dated 3 -9 -2003 charging interest and contemplating penal action under Sections 76, 77, 78, 71 and 75A of the Act. Eventually, the demand of service tax made under Section 11D of the Central Excise Act was dropped by the Assistant Commissioner on the observation that during the material period, Section 11D cannot be invoked as the same was made applicable to service tax matters only w.e.f. 16 -8 -2002. However, the learned Assistant Commissioner imposed a penalty of Rs. 1,000/ - under Section 77, Rs. 3,30,000/ - under Section 78, Rs. 500/ - under Section 75A and Rs. 77,500/ - under Section 79 of the Act.

(2.) WHEN the matter was taken up before the Commissioner (Appeals), he dropped the penalty imposed under Section 79 but retained the rest.

(3.) AGGRIEVED by the order of the Commissioner (Appeals), the matter has come before us. The learned Counsel for the appellants has argued that no penalty could be imposed in view of the fact that the entire tax demanded itself stands dropped by the authorities. According to him, penalty imposed on him under Section 78 should necessitate demand under Section 73 which is not covered here. He relies upon the following citations to drive home the point that heavy penalties are not imposable in cases where the appellant is working under bona fide belief: Sajjan Kumar Kariwala v. CCE Inma International Security v. CC Bharti Cellular Ltd. v. CCE 2006 (2) S.T.R. 255 (Commr. Appl.) : 1999 (106) E.L.T. 564 (Commr. Appl).