Service tax penalty not sustained where tax and interest were paid and liability was initially unknown

Penalties for failure to register and pay service tax on mandap keeper services were found unsustainable where the assessee had already paid the tax and interest in full. The tribunal accepted that the assessee was unaware of the liability until informed, after which payment was made, and noted the absence of any independent reasoning to support penal action. On that basis, the penalties were set aside and the assessee succeeded on the penalty issue.

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Issues: Whether penalties imposed for failure to register and pay service tax as a mandap keeper were sustainable when the service tax and interest had been paid and the assessee claimed ignorance of liability.

Analysis: The service tax dues together with interest had already been discharged and were not disputed. The penalty was imposed because the assessee had not registered under section 69 and had not paid service tax on mandap keeper services. The order noted that no independent reasoning had been given for the penalties and accepted the assessee's explanation that it was not aware of the liability until informed, after which payment was made with interest.

Conclusion: The penalties were held to be unsustainable and were set aside in favour of the assessee.

Final Conclusion: The dispute was decided only on the question of penalty, and the assessee succeeded on that issue.

Ratio Decidendi: Penalty is not justified where tax and interest have been paid and the case does not disclose any independent basis for penal action beyond an initial failure arising from bona fide ignorance of liability.

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