Tribunal partially allows appeal, overturns penalty under Finance Act Section 78. Recovery Agent's reliance on bank considered.

The Tribunal allowed the appeal in part, setting aside the penalty under Section 78 of the Finance Act. The appellant, a Recovery Agent for a bank, had paid the service tax with interest upon notice, arguing lack of mala fide intent and reliance on the bank for tax payment. The Tribunal found no deliberate violation of law and referenced similar cases where penalties under Section 78 were set aside. The Revenue's argument that the appellant should have ensured tax compliance independently was considered, but ultimately, the penalty under Section 78 was revoked.

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Issues:
Imposition of penalty under Section 78 of the Finance Act.

Analysis:
The appellant, a Recovery Agent for a bank, was directed to pay service tax for the period 2008-09 to 2012-2013. The appellant deposited the tax with interest upon receiving notice, prior to the show cause notice. The Department imposed penalties under various sections, including Section 78. The Commissioner (Appeals) set aside penalties under Section 77 but confirmed others. The appellant appealed to the Tribunal, arguing lack of mala fide intent and reliance on the bank for tax payment. The appellant cited cases supporting their position. The Revenue contended that the appellant should have ensured tax compliance independently. Both parties cited case laws to support their arguments.

The Tribunal noted that there was no deliberate violation of law by the appellant and that similar cases had led to penalties under Section 78 being set aside. Consequently, the Tribunal allowed the appeal in part, setting aside the penalty under Section 78 of the Finance Act.

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