1. This appeal has been filed by the revenue against the impugned order in appeal dated 22-11-1999 vide which the Commissioner (Appeals) modified the Order-in-Original of the Assistant Commissioner by reducing the penalty to Rs. 7,000 from Rs. 50,000 as imposed by the Assistant Commissioner through Order-in-Original, under section 77 of the Finance Act, 1994, for late submission of the quarterly returns pertaining to the service tax, on the respondents. The respondents were imposed penalty of Rs. 50,000 under section 77 of the Finance Act for the late filing of the quarterly returns for the quarter ending June, 1997, September, 1997 and December, 1997 at the rate of Rs. 100 per day by the Assistant Commissioner through Order-in-Original dated 27-11-1998. They, however, challenged that order of the Assistant Commissioner before the Commissioner (Appeals) who through the impugned order reduced the penalty amount to Rs. 7,000 only on the ground that the penalty imposed on the respondents by the Assistant Commissioner was on higher side.

2. The Revenue has come up in appeal before the Tribunal against the impugned order of the Commissioner (Appeals).

3. I have heard both the sides and gone through the record.

4. The facts are not much in dispute. The respondents got registration for courier service under section 69 of the Finance Act, 1994 (Service Tax). They failed to file the returns for the quarters ending June, 1997, September, 1997 and December, 1997 within the stipulated period prescribed under sub-section (1) of section 70 of the Finance Act. The Assistant Commissioner accordingly keeping in view the delay which was of 500 days from the due date in filing of the returns by the respondents, imposed penalty in accordance with the provisions of section 77 of the Act of Rs. 50,000 on them.

5. No doubt the delay in filing the returns could be condoned by the Commissioner (Appeals) but for sufficient cause/ground and that too after recording reasons in support thereof whereas the perusal of the impugned order passed by him shows that he had not recorded any reasons for reducing the penalty amount from Rs. 50,000 as imposed by the Assistant Commissioner to Rs. 7,000. Simply because the penalty amount imposed by the Assistant Commissioner, according to his view, was on higher side, no reduction therein still could be legally made. The provisions of section 77 of the Finance Act are mandatory and in case of failure on the part of the service tax assessee to file the quarterly returns in time, the penalty of any lesser amount than the one prescribed under that section, cannot be imposed. The Commissioner (Appeals) had ignored the provisions of that section altogether. The ratio of the law laid down in Sajjan Kumar Kariwala v. CCE 2003 (159) E.L.T. 1131 (Trib. - Delhi) that penalty should not be imposed if the returns were nil, could not be made applicable to the case of the respondents by the Commissioner (Appeals) without recording the findings that the returns of the respondents for the quarters in question were nil and that they were prevented by sufficient cause or circumstances from filing the returns within the stipulated period. As observed above, he had not recorded any reasons either for condoning the delay or for reducing the penalty amount, as imposed on the respondents by the Assistant Commissioner. Therefore, the impugned order of the Commissioner (Appeals) cannot be legally sustained and deserves to be set aside.

6. In view of the discussion made above, the impugned order of the Commissioner (Appeals) is set aside and the matter is sent back to him for redecision of the appeal in accordance with law after hearing both the sides.