Commissioner of C. Ex., Ludhiana v. Pannu Property Dealers

[Order]. - There are the applications filed by the Revenue for stay of the operation of the order-in appeal No. 155/CE/LDH/08 dated 3-6-08 and 156/CE/LDH/08 dated 3-6-08 passed by CCE (Appeals), Chandigarh. Since, the facts and issue involved in both the appeals are common, same are being disposed of by a common order. In both these cases, the respondents are real estate agents and though this service had become taxable in the year 1997, the Respondents had neither taken registration nor were they paying service tax in respect of the taxable services of real estate agency being provided by them during periods from 2001-02 to 2003-04. It is only on detection of non-payment of tax in the year 2007, that the respondents paid the service tax along with the interest. However, subsequently, the show cause notices were issued for confirmation of service tax demand and imposition of penalty under Sections 76, 77 and 78 and the Deputy Commissioner vide orders-in-original dated 16-10-07 and 24-10-07, in addition to confirmation of the service tax demands, also imposed penalties under Sections 76, 77 and 78 of the Finance Act, 1994. The Commissioner (Appeals), however, by the impugned orders while upholding the service tax demands within the five years period and imposition of penalty under Section 78, set aside the penalties under Sections 76 and 77. It is against the Commissioner (Appeals)’s orders setting aside the penalties imposed under Sections 76 and 77 that Revenue has filed these appeals along with stay petitions.

2. The learned departmental representative pleaded that from the language of Section 76, as it stood during the period of dispute, penalty under this Section is attracted if the service tax is not paid on due date and that it is only in the budget of the year 2008. Section 78 was amended, providing that if penalty under Section 78 is imposed, penalty under Section 76 is not warranted. However, during the period of dispute, there was no such provision and therefore, penalty under Section 76 is warranted and the Commissioner (Appeals) has wrongly set aside the same.

3. The learned counsel on behalf of the respondent pleaded that since in both these cases, the entire amount of service tax along with interest and equal penalty under Section 78 has been paid, prima facie, there is no justification for imposition of penalty under Sections 76 and 77. In this regard he relied on the Tribunal’s judgment in the case of The Financers v. CCE, Jaipur reported in (Tri.-Del.) and also in the case of CCE, Ludhiana v. Silver Oak Gardens Resort reported in (Tri.-Del.), wherein the Tribunal held that penalty under Section 76 is not warranted when the penalty under Section 78 has been imposed and that imposition of penalty under Section 76 as well as Section 78 is too harsh.

4. I have carefully considered the submissions from both the sides. I find that on this issue, this Tribunal in the case of The Financers v. CCE, Jaipur (supra) and CCE, Ludhiana v. Silver Oak Gardens Resort (supra) has taken a view that penalty under Section 78 is attracted in the cases where there is mens rea and penalty under Section 76 is attracted in those cases of failure to pay the service tax where there is no mens rea, that cases in which penalties have been imposed under Section 78 cannot fall in respect of the same service tax evaded for a double penalty under Section 76 also, that simultaneous imposition of penalty under Sections 76 and 78 is too harsh and that if the penalty has been imposed under Section 78, separate imposition of penalty under Section 76 is not called for. In view of this, I am of the view that, prima facie, there is no justification for staying the impugned orders. The stay applications filed by the Revenue are therefore dismissed.

(Dictated and pronounced in open court)