Pre-deposit waiver for service tax penalties granted where tax was paid and no intent to evade was found.

Waiver of pre-deposit was granted for enhanced service tax penalties because the tax and interest had already been paid and the adjudicating authority found no suppression or intent to evade. The commentary notes that penalty was not warranted for a mere venial breach, and that only a lesser penalty had been imposed while other penalties were dropped. On that basis, recovery of the penalties was stayed pending disposal of the appeals.

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Issues: Whether waiver of pre-deposit of the penalties imposed and enhanced under the service tax provisions was justified, in view of prior payment of the tax and interest and the absence of suppression or intent to evade.

Analysis: The record showed that the tax and interest had already been paid and that the adjudicating authority had found no mala fide intention to evade tax. Penalty under the relevant provisions was not warranted on mere venial breach, and the authority had exercised discretion to impose only a lesser penalty while dropping other penalties. On that basis, the pre-deposit requirement for the enhanced and imposed penalties was waived and recovery was stayed pending disposal of the appeals.

Conclusion: Waiver of pre-deposit was granted and recovery of the penalties was stayed till disposal of the appeals.

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