Reasonable cause for delayed service tax payment justified waiver of penalty under the Finance Act, with relief upheld.

Penalty under Sections 77 and 78 of the Finance Act, 1994 was waived where reasonable cause existed for delayed payment of service tax, and Section 80 was applied to grant relief. The Commissioner (Appeals) found sufficient cause for the delay and set aside the penalty. That exercise of discretion was found free from infirmity, and the Revenue's challenge did not displace the basis for waiver. The penalty relief was therefore upheld and the Revenue's appeal failed.

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Issues: Whether the waiver of penalty imposed under Sections 77 and 78 of the Finance Act, 1994 was justified by applying Section 80 of the Finance Act, 1994 on the ground of reasonable cause for non-payment of service tax within the stipulated time.

Analysis: The Commissioner (Appeals) had recorded that there was reasonable cause for the delay in payment of service tax and had extended the benefit of Section 80 of the Finance Act, 1994, thereby setting aside the penalty. The order under challenge disclosed no infirmity in the exercise of that discretion, and the Revenue's objection to the grant of relief did not dislodge the basis of the waiver.

Conclusion: The waiver of penalty was upheld and the Revenue's appeal failed.

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