Bona fide delay and reasonable cause can bar revisional enhancement of service tax penalty under penalty provisions.

Where the original authority accepted bona fide conduct and reasonable cause for delayed payment of service tax, revisional enhancement of penalty under Sections 76 and 78 was held unsustainable. The text applies the principle that, once reasonable cause and bona fides are found, revision should not interfere to increase penalty, especially where the delayed tax was later deposited with interest. A contrary precedent was distinguished because the penalties there had not been dropped on any comparable finding of reasonable cause. The appeal accordingly succeeded and the enhanced penalty was set aside.

---

---

Issues: Whether the revisional authority was justified in enhancing the penalty under Sections 76 and 78 when the original authority had accepted bona fide conduct and reasonable cause for delayed payment of service tax.

Analysis: The original authority had taken a reasonable view on the assessee's conduct and accepted that there was bona fide action in making belated deposit of service tax along with interest. In such circumstances, the precedent relied upon supported the view that where reasonable cause and bona fides are found, the revisional authority should not interfere to enhance the penalty. The decision distinguishing the contrary precedent was accepted on the basis that there the penalties had not been dropped on any comparable finding of reasonable cause.

Conclusion: The revisional enhancement of penalty was not sustainable and the appeal succeeded.

---