STA No. 19 of 2010 -1- *** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH STA No. 19 of 2010 Date of decision: 28.9.2010 Commissioner of Central Excise Commissionerate, Ludhiana ...Appellant Versus M/s Matestic Hotel Limited ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Mr. Sanjeev Kaushik, Advocate for the petitioner. Mr. Vikrant Kockria. Advocate for the respondent. **** ADARSH KUMAR GOEL, J ( Oral) . 1. This appeal has been preferred under Section 35-G of the Central Excise Act, 1944 read with Section 83 of Finance Act, 1994 against the order (Annexure A-3) dated 27.11.2008 passed by the learned Customs, Excise & Service Tax Appellate Tribunal, New Delhi proposing the following substantial question of law:- “Whether the minimum penalty under Section 76 and 78 could be lawfully reduced or set aside when inclusion of service charges in the taxable value is not under dispute?” 2. The assessee is providing taxable service. Show cause notice dated 11.10.2005 was issued to the assessee under Section 73(1) of the Finance Act, 1994 alleging suppression of turnover of taxable service and after due consideration, the adjudicating authority passed 'order' in original STA No. 19 of 2010 -2- *** creating demand and also imposing penalty which was upheld on appeal. On further appeal, the Tribunal remanded the matter to determine the claim of the assessee for abatement as per exemption notification relied upon by the assessee. Penalty under Section 76 of the Act was reduced to Rs.25,000/- while penalty under Section 78 was set aside. 3. We have heard learned counsel for the parties. 4. Learned counsel for the revenue submits that there is no provision for reduction of penalty and if a case was made out penalty has to be minimum. 5. Learned counsel for the respondent has not been able to show how penalty less than minimum can be imposed, if mens rea exists. The matter has been remanded to adjudicating authority without a specific finding either way on existence of mens rea. In such a situation, question of penalty could have been left open to be decided in the light of finding finally recorded on taxability. Thus, the view taken by the Tribunal reducing the penalty to Rs.25,000/- cannot be upheld. The issue will have to be reconsidered in accordance with law. 5. In view of the above, instead of remanding matter to the Tribunal for fresh decision, we direct that the question of leviability or otherwise of penalty is left open to be decided in accordance with law by the adjudicating authority in the light of its final finding. 6. The appeal is disposed of. (Adarsh Kumar Goel) Judge September 28, 2010 (Ajay Kumar Mittal) Pka Judge