VINAYAKA TRAVELS Vs. COMMISSIONER OF SERVICE TAX, BANGALORE

JUDGEMENT

(1.) THIS appeal arises from Order -in -Revision No. 100/2007 dated 11 -12 -2007 setting aside the Assistant Commissioners order exercising his powers to drop the imposition of penalty under Sections 76, 77 and 78 of the Finance Act. In terms of Section 80 of the Finance Act, the Original Authority has been empowered to drop penalty in case if the assessee shows reasonable cause for failure to comply with the provisions mentioned in Section 80. The Assistant Commissioner in Order -in -Original No. 42/D -II/2005, dated 22 -12 -2005 examined the issue as regards the non -imposition of penalty in Para 9 of his order. He has noted in the said order as follows :

(2.) THE Revisionary Authority has not agreed with the discretion exercised by the Assistant Commissioner in not imposing penalty. He has not accepted the assessees plea of having deposited the Service Tax along with interest before the issue of show cause notice as one of the reasons also for dropping the penalty. He has followed the Karnataka High Court order in M/s. The First Flight Couriers Limited as reported in 2007

(3.) THE learned Counsel arguing for the appellants submitted that M/s. The First Flight Couriers Ltd. (supra) is not applicable, as the Original Authority had seen that there was no reasonable cause for dropping the proceedings which has not been noticed by this Bench while setting aside the penalty. The High Court of Karnataka in another matter in the case of CCE v. Sunitha Shetty - 2006 (3) S.T.R. 404 = 2004 (174) E.L.T. 313 held that the Commissioner was not justified in reviewing the order passed by the Deputy Commissioner, as he had exercised his discretion under Section 80 of the Finance Act. The High Court of Karnataka again re -affirmed the judgment rendered in the case of CCE v. Sunitha Shetty (supra) and dismissed the Revenues appeal against setting aside of penalty in the case of CCE, Bangalore v. Royal Agencies in their order dated 26 -2 -2008 in Central Excise Appeal No. 4/2004. Likewise, the Bombay High Court in the case of Commissioner of Central Excise and Customs v. Ashish Vasantrao Patil - 2008 (10) S.T.R. 5 dismissed the appeal of the Revenue holding that no question of law would arise once the discretion is exercised and reasons are recorded for reducing penalty.