Suppression-based penalty under service tax law sustained where earlier notices had already put the assessee on taxability notice.

Penalty under Section 78 of the Finance Act was upheld because the demand fell within the normal limitation period and earlier show cause notices on the same taxable activity had already put the assessee on notice about taxability. On those facts, the allegation of suppression with intent to evade service tax was not established in the manner required to displace the penalty. The challenge to the penalty therefore failed.

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Issues: Whether penalty under Section 78 of the Finance Act was liable to be sustained on the allegation of suppression with intent to evade payment of service tax.

Analysis: The demand in the present proceedings was within the normal period of limitation. Earlier show cause notices on the same taxable activity had already been issued, and the same dispute had travelled earlier, putting the assessee on notice regarding taxability. In these circumstances, the allegation of suppression with intent to evade payment of tax was not made out in the present proceedings in the manner urged against the assessee. The impugned order was therefore found free from infirmity on the question of penalty.

Conclusion: Penalty under Section 78 of the Finance Act was restored, and the challenge to its imposition failed.

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