Natural justice bars service tax penalty where no notice or hearing was given and sufficient cause was not examined.

Penalty under Sections 76 and 77 of the Finance Act could not be sustained where no show cause notice was shown to have been issued and no opportunity of hearing was afforded to the assessee. The authority also failed to examine the plea of sufficient cause under Section 80 for delayed filing of returns and delayed service tax payment after introduction of the levy. This omission violated the principles of natural justice, so the penalty order was set aside and the matter remanded for fresh decision after granting a reasonable opportunity to establish sufficient cause.

---

---

Issues: Whether penalty under Sections 76 and 77 of the Finance Act could be sustained when no show cause notice or opportunity of hearing was given and the plea of sufficient cause under Section 80 of the Finance Act was not examined.

Analysis: The order imposing penalty was found to have been passed casually and without material showing that any show cause notice was issued before the penalties were imposed. No opportunity of hearing was afforded to the assessee. The appellate authority also failed to consider the plea that there was sufficient cause for the delayed filing of returns and payment of service tax in the initial period after introduction of the levy. The omission to consider these matters amounted to violation of the principles of natural justice.

Conclusion: The penalty order could not be sustained and the matter was required to be remanded for fresh decision after granting reasonable opportunity to establish sufficient cause.

---