SECTION 80 OF THE FINANCE ACT, 1994 – PENALTY NOT TO BE IMPOSED IN CERTAIN CASES :

The Assessee was providing security services. It had paid certain amount towards Service Tax prior to issue of show cause notice but had not obtained registration and had not filed returns. After issue of SCN, it paid balance of service tax demand in instalments. However, on adjudication, adjudicating authority, imposed penalty. On appeal before the Commissioner (Appeal), the Commissioner (Appeal), on finding a sufficient cause, reduced penalty amount. The Tribunal also upheld said reduction. The Department had preferred the appeal before the High Court, challenging the orders passed by the Appellate Authority reducing the penalties imposed by the assessing authority.

The High Court dismissed the appeal. The High Court find “When two fact finding authorities have held the non-payment of service tax was not intentional, it was not with any intention to avoid tax, considered the circumstances in which the assessee was placed and reduced the penalty, it cannot be said that the said order suffers from any legal infirmity. No substantial question fo law arises for consideration in this appeal. The contention that once there is a default the payment of penalty is automatically unsustainable in view of the language employed in section 80 of the Act, where if a sufficient cause is made out for the default under any of these provisions, then no penalty shall be imposed. In that view of the matter, the order passed by the Tribunal do not suffer from any legal infirmity, which calls for interference. Therefore the substantial question of law is answered in favour of the assessee and against the Revenue.”.

Commissioner of Central Excise, Mangalore V. Nisa Industrial Service (P.) Ltd. – HIGH COURT OF KARNATAKA

NOTE :

In this case, the assessee was succeed in both the appeal i.e. before the Commissioner (Appeal) and Tribunal. The department had filed the appeal before the High Court on the ground that when two fact finding authorities had held that non payment of service tax was not intentional, considered circumstances in which assessee was placed and penalty was reduced, it could not be said that said order suffered from any legal infirmity. So one can rely upon the said decision in any matter while hearing before the authority.