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ST - Neither there was any intention to save tougher provisions of S. 78 of FA, 1994 after 8/4/2011 nor is S.38A of CEA, 1944 legally capable of saving provisions of erstwhile S. 78, as same is not a piece of delegated legislation - Amended s.78 applies at time of adjudication of cases booked prior to 08/04/2011: CESTAT

By TIOL News Service

MUMBAI, MAR 14, 2016: THIS is a Revenue appeal.

The short issue involved is whether penalty equivalent to the service tax or 50% is imposable in terms of Section 78 keeping in view the amendment of FA, 1994 effected on 8/4/2011.

The AR submitted that penal provisions by which penalty under Section 78 is 50% of the Service tax amount, if the transaction of services are recorded in the records of the assessee, has come into force w.e.f. 8/4/2011. Further, though the adjudication was done after this date but since offence of evasion of service tax had taken place prior to 8/4/2011,the un-amended provisions of Section 78 according to which penalty equivalent to the service tax is imposable, shall apply.

None appeared on behalf of the respondent nor any request for adjournment was made.

The Bench observed that the Commissioner (A) had given detailed findings on the issue and had rightly concluded as below -

"13. In view of the above discussion it clearly emerges that neither there was any intention to save the tougher provisions of Section 78 of the Act after 8/4/2011, nor Section 38A of the CEA is legally capable of saving the provisions of erstwhile Section 78 of the Act, as Section 78 is not piece of the delegated legislation. Further, the erstwhile Section 78 of the Act does not exist after 8/4/2011 in view of its substitution by new Section 78 of the Act. Further in the present case, the Principle of Beneficial Construction also does not allow imposition of higher penalty under the provisions of erstwhile Section 78 of the Act. Thus, in the present case, the imposition of penalty equal to 50% of the Service Tax amount not paid, i.e. Penalty of Rs. 12,15,924/- is found legal and proper."

Holding that the amended Section 78 shall apply at the time of Adjudication of the show cause notice, the Bench found no infirmity in the impugned order passed by the Commissioner (Appeals).

The Revenue appeal was, therefore, dismissed.

In passing:  Also see 2015-TIOL-1682-CESTAT-MUM.

(See 2016-TIOL-607-CESTAT-MUM)


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