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August 2015

2015 (38) STR 1162 (Tri.-Del.) Piramal Healthcare Ltd. vs. CCE & ST, Indore.

By Puloma Dalal
Jayesh Gogri
Mandar Telang Chartered Accountants
Reading Time 1 mins
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Penalty imposed was exorbitant as compared to service tax demand and was unjustified in view of revenue neutrality and interest burden already suffered on account of non-payment. Non-filing of ST-3 returns does not attract penalty u/s. 77.

Facts:
After adjudication, to buy peace of mind, the Appellants paid service tax along with interest. However, penalty u/s. 77 of the Finance Act, 1994 levied for non-filing of service tax returns was appealed against. It was argued that the amount of penalty was exorbitant compared to service tax demand and penalty cannot be levied u/s. 77 for nonfiling of returns. Further, service tax was not paid due to improper knowledge of law and it was a revenue neutral case since the amount was available to them as CENVAT credit. Department contested that penalty u/s. 77 of the Finance Act, 1994 was leviable in absence of registration.

Held:
In view of revenue neutrality and interest burden already suffered on account of non-payment, penalties were dropped. The Tribunal observed that there was nonapplication of mind by the original adjudicating authorities since penalty could be levied u/s. 77 of the Finance Act, 1994 for failure to file service tax return.

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