Section 78A of Finance Act 2013 prescribes for personal penalty on employees, Directors, managers or secretary of company. The penalty provided under section 78A is in addition to penalties prescribed for the company. As per section 78A :<\/p>\n
\u00a0“Where a company has committed any of the following contraventions, namely:\u2014<\/em><\/strong><\/p>\n \u00a0(a)\u00a0evasion of service tax, or<\/em><\/strong><\/p>\n \u00a0(b)\u00a0issuance of invoice, bill or, as the case may be, a challan without provision of taxable service in violation of the rules made under the provisions of this Chapter, or<\/em><\/strong><\/p>\n Section 78A : Personal penalty in service tax law<\/em><\/strong><\/p>\n (c)\u00a0availment and utilisation of credit of taxes or duty without actual receipts of taxable service or excisable goods either fully or partially in violation of the rules made under the provisions of this Chapter, or<\/em><\/strong><\/p>\n \u00a0(d)\u00a0failure to pay any amount collected as service tax to the credit of the Central Government beyond a period of six months from the date on which such payment becomes due, then any director, manager, secretary or other officer of such company, who at the time of such contravention was in-charge of and was responsible to the company for the conduct of business of such company and was knowingly concerned with such contravention shall be liable to penalty which may extend to one lakh rupees.”<\/em><\/strong><\/p>\n \u00a0It must be noted that a similar section 81 which was\u00a0omitted\u00a0by finance Act 2004 explained company to include partnership firm and association of persons. The said section 81 also explained Director to include partners of the firm. A similar kind of\u00a0explanation is missing in the presently active section 78A. Which means the words used in the section78A viz. “company” & “Director” should strictly be understood in its\u00a0literal\u00a0sense.<\/p>\n \u00a0From the reading of the section it is clear that in order to attract penalty the person in charge who may be director, employee, manager or secretary should have knowledge of the contraventions mentioned in sub-sections (a) to (d) done by the company.
\nHence the duty is cast of Directors, employees, managers or secretary to prove that either he was not in charge of or was not responsible for the conduct of the company or the contravention was performed without his knowledge.<\/p>\n