Service tax penalty reduction for delayed payment where the demand was admitted and the original penalty was excessive.

For short levy and delayed payment of service tax, penalty under Section 76 was upheld in principle because the tax demand was undisputed, interest had been paid, and the explanation for non-payment until departmental action was found unconvincing. However, the overall facts and circumstances justified reduction of the quantum as excessive. The penalty under Section 76 was therefore reduced to Rs. 5,000, while the penalty under Section 77 was left undisturbed.

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Issues: Whether the penalty imposed for short levy and delayed payment of service tax under Section 76 of the Finance Act required reduction in the facts of the case.

Analysis: The tax demand was not disputed and had been paid with interest. The explanation for non-payment until departmental action was initiated was found unconvincing, warranting penalty under Section 76. However, considering the overall facts and circumstances, the quantum of penalty was considered excessive.

Conclusion: The penalty under Section 76 was reduced to Rs. 5,000 from Rs. 16,000, while the penalty under Section 77 remained undisturbed.

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