By TIOL News Service

MUMBAI, AUG 10, 2015: REVENUE is before the CESTAT against the order-in-appeal wherein the Commissioner (Appeals) dropped the penalty imposed u/s 78 and reduced the penalty imposed u/s 77 from 20,000/- to Rs.500/-.

The AR submitted that the respondent had charged and recovered service tax from M/s. Cadbury India Ltd but have not deposited the same and, therefore, reduction in penalties was not justified.

The respondent submitted that they had no malafide intention to evade service tax. Inasmuch as they had been paying amount in cash to the Consultant for depositing the same towards their ST liability but he committed a fraud in the sense that he pocketed the money instead of depositing it with the exchequer. Further, in view of the fraud committed by the consultant, department had also initiated the criminal proceedings and filed FIR with the police and all this goes to show that they did not have any malafide or intention to evade service tax. And, therefore, the Commissioner(A) had rightly invoked s.80 and reduced the penalties imposed.

The Bench after extracting the findings of the Commissioner (A) observed -

"…it can be seen that the same is discussed in details that regarding the fraud committed by the consultant with the appellant for not depositing service tax in the government's account for which FIR proceedings also initiated against consultant by the department, which clearly shows that it is not the appellant who has committed an offence of non payment of service tax, it is the consultant, who has defrauded them therefore there is reasonable cause for waiver of penalty under Section78. Accordingly Ld. Commissioner (Appeals) has correctly set aside the penalty imposed under Section 78. As regard the reduction of penalty under Section 77 from Rs. 20,000/- to Rs. 500/-. On the same fact Ld. Commissioner (Appeals) has exercised his discretion in reducing penalty from Rs. 20,000/- to Rs. 500/-….;"

Holding that there is no reason to interfere with the findings of the Commissioner (Appeals) who has reduced penalty by proper application of mind, the same was upheld and the Revenue appeal was dismissed.

In passing: Also see DDT 2574 & 2015-TIOL-1586-CESTAT-MUM & 2015-TIOL-1587-CESTAT-MUM .

(See 2015-TIOL-1650-CESTAT-MUM)