SAFE TEST ENTERPRISES Vs. CCE

JUDGEMENT

(1.) THE appellants challenge imposition of penalties both under Section 76 and 78 of Chapter V of the Finance Act, 1994. Penalties have been imposed on the ground that the assessees suppressed receipt of taxable service and did not pay tax with intention to evade payment thereof.

(2.) THE plea of the assessees that the extended period is not available to the Department cannot be acceded to for the reason that the charge of suppression has been confirmed by the adjudicating authority who has confirmed the demands beyond the normal period of limitation and the confirmation has not been challenged by the assessees. Therefore, penalty is sustainable against the assessees. However, I see force in the submission of the assessees that penalty both under Section 76 and 78 cannot be imposed for the reason that these two provisions are mutually exclusive. I see further force in the assessee's submission that the liability to penalty has to be restricted to 25% of the service tax amount in the light of First Proviso to Section 78 which provides that where the service tax as determined under Section 73(2) and the interest payable thereon under Section 75 is paid within 30 days from the date of communication of the order of the Central Excise officer determining the tax, amount of the penalty liable to pay shall be 25% of the service tax so determined. The assessees have paid the tax together with interest prior to the issue of the show -cause notice. Therefore, the above proviso to Section 78 will be applicable. In the light of the above proviso, I set aside the penalty imposed under Section 76 and reduce the penalty under Section 78 to 25% of the tax amount.