Service tax penalty fails where abatement applies and records show no deliberate evasion or suppression of facts.

Penalty under service tax law was held unsustainable where freight records showed tax had already been discharged after permissible abatement under Notification No. 34/2004-S.T., and the record did not establish deliberate suppression or mala fide intent. The original adjudicating authority had accepted the freight details, noted low freight charges in several cases, transport by auto, car and taxi, and found no basis for late fee or penalty. The appellate authority's cryptic remand and penalty direction were set aside, and the original relief to the assessee was restored.

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Issues: Whether the assessee was liable to penalty and fresh re-quantification of service tax under GTA services, and whether the appellate order remanding the matter was sustainable.

Analysis: The original adjudicating authority had examined the freight details, applied the abatement under Notification No. 34/2004-S.T. dated 03.12.2004, and found that the tax liability had already been discharged. It also held that the circumstances, including low freight charges in several cases, transportation by auto, car and taxi, and the absence of deliberate suppression, did not justify levy of penalty or late fee. The appellate authority, however, set aside that order without dealing with the merits in any substantive manner and proceeded on a cryptic finding of intentional non-payment. The Tribunal found the original findings to be reasoned and the basis for penalty under Section 78 of the Finance Act, 1994 to be absent.

Conclusion: The remand and penalty direction were unsustainable, and the order of the original adjudicating authority was restored in favour of the assessee.

Final Conclusion: The appeal succeeded, the impugned appellate order was set aside, and the assessee's relief from penalty and further re-quantification was maintained.

Ratio Decidendi: Penalty under service tax law cannot be sustained where the tax liability has been discharged after permissible abatement and the record does not establish deliberate evasion or mala fide intent.

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