The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) deleted penalty under the Finance Act on the ground that there was bonafide doubt as to Service Tax liability and no intentional evasion of Service Tax.
A Show Cause Notice was issued for the period from 01.04.2005 to 30.06.2010 alleging that the appellant, M/s. Cable Vision, was liable to pay Service Tax as per Section 68 of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules, 1994, thereby proposing to demand the same by invoking the larger period of limitation, apart from applicable interest and penalty.
The Adjudicating Authority, after hearing the appellant and after considering its explanation, has vide impugned order confirmed a partial demand thereby allowing a partial CENVAT Credit also, but however, has proceeded to confirm the demand in respect of most of the other part.
The issue relates to the penalty levied under Section 78 of the Finance Act, 1994.
Section 78 of the Finance Act, 1994 is used to levy penalty when service tax has been: not levied; or not paid; or short levied; or short paid; or erroneously refunded with the intention of evading payment of service tax due to following reasons :fraud; or collusion; or wilful mis-statement; or suppression of facts; or contravention of any provisions or rules. Therefore, if the service tax is evaded with any malafide intention then section 78 is applicable. But if assessee proves that there is no any malafide intention then section 76 is applicable.
The Coram comprising P Dinesha, Judicial Member and M Ajit Kumar, Technical Member observed that “the appellant had entertained a bona fide doubt as to the Service Tax liability and there is also no finding that the appellant had intentionally evaded the payment of Service Tax. Moreover, from the facts which have been brought on record, there is no scope for any fraud or intent to evade the payment of Service Tax.”
“Hence, we deem it proper to delete the penalty levied under Section 78 of the Finance Act, 1994 by invoking the provisions of Section 80 of the Finance Act, 1994” the Tribunal noted.
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