Reasonable cause can justify waiver of penalty for delayed tax compliance when tax and interest are paid before notice.

Penalty for delayed service tax payment and late filing of returns may be waived where the assessee demonstrates reasonable cause for non-compliance and discharges the tax with interest before issuance of the show cause notice. The record accepted that the delay occurred, but the explanation that the individual assessee was managing the work personally and had undergone surgery was treated as sufficient to satisfy the statutory relief condition. On that basis, the penal-relief provision was applied, the penalty proceedings were not sustained, and consequential relief followed.

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Issues: Whether the appellant was entitled to waiver of penalty for delayed payment of service tax and delayed filing of returns by invoking the statutory provisions permitting relief on showing reasonable cause.

Analysis: The delay was accepted to have occurred, but the service tax had been paid with interest before issuance of the show cause notice. The stated explanation was that the appellant was an individual managing the work himself and had undergone surgery, which affected compliance. In these circumstances, the requirement of reasonable cause for relief from penalty was held to be satisfied.

Conclusion: The appellant was entitled to the benefit of the penal-relief provision, and the penalty proceedings were not sustained.

Final Conclusion: The appeal was allowed and consequential relief followed in favour of the appellant.

Ratio Decidendi: Penalty for delayed tax compliance may be waived where the assessee shows reasonable cause and has discharged the tax liability with interest before issuance of the show cause notice.

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