KATTA ENTERPRISES Vs. CCE

JUDGEMENT

(1.) LEARNED Counsel Shri Bipin Garg submits that the appellants deposited the service tax with interest before issuance of show cause notice for which there should not be harsh penalty under Section 78 of the Finance Act, 1994. The tax was paid on 4.8.2003 and interest was paid subsequently. Therefore, there should not be levy of any penalty while the appellant did not dispute the service tax liability.

(2.) LEARNED DR supports the order of the authorities below.

(3.) WE do appreciate the hardship of the appellant. If the appellant is able to bring out a case before the learned Commissioner that it shall be covered by para 22 of the decision of the Hon'ble Court in the case of K.P. Pouches Pvt. Ltd. reported in : 2008 (228) ELT 31 the appellant may not be harshly dealt with by severe penalty. The ratio laid down in paragraph relating to penalty although was in the context of excise law, that shall be squarely applicable under Section 78 of the Finance Act, 1994. Similar provision as that of Section 11AC of the Central excise Act, 1944 was incorporated into Finance Act, 1994 to mitigate hardship of the appellants. We had occasion to deal with such an issue in Bajaj Travels case decided on 19.6.2009 and reported in, 2009 TIDL -1063 to CESTAT -DEL. Following the ratio laid down by Hon'ble High Court of Delhi in the case of K.P. Pouches and our discussion in Bajaj Travels on the levy of penalty under Section 78 of the Finance Act, 1994, we expect the learned Commissioner to grant appropriate option under law to the appellant for which levy of penalty may be limited to the extent indicated by provisions of Section 78. This we say following para 22 of the judgment in the case of K.P. Pouches (supra).