Reasonable cause can waive service tax penalty, but relief does not extend beyond the enabling provision.

Penalty under Section 76 of the Finance Act, 1994 was waived because tax had been paid, no contumacious conduct was found, and the assessee showed reasonable cause through financial hardship and family illness, attracting relief under Section 80. Penalty under Section 75A was sustained because it fell outside the scope of that relief provision and no sufficient basis was found to disturb the levy. The appeal was thus allowed only in part, with deletion of the Section 76 penalty alone.

---

---

Issues: (i) Whether the penalty imposed under Section 76 of the Finance Act, 1994 was liable to be waived on the basis of reasonable cause under Section 80 of the Finance Act, 1994. (ii) Whether the penalty imposed under Section 75A of the Finance Act, 1994 was sustainable.

Issue (i): Whether the penalty imposed under Section 76 of the Finance Act, 1994 was liable to be waived on the basis of reasonable cause under Section 80 of the Finance Act, 1994.

Analysis: The taxes had been paid, and no contumacious conduct was found. The appellant was a small businessman, and the stated family illness caused financial hardship and delay in payment. These circumstances were treated as constituting reasonable cause for invoking the statutory relief from penalty.

Conclusion: The penalty under Section 76 was waived in favour of the assessee.

Issue (ii): Whether the penalty imposed under Section 75A of the Finance Act, 1994 was sustainable.

Analysis: The penalty under Section 75A was held to be outside the scope of the relief provision relied upon, and no sufficient basis was found to interfere with that levy.

Conclusion: The penalty under Section 75A was confirmed against the assessee.

Final Conclusion: The appeal succeeded only to the extent of deletion of the penalty under Section 76, while the penalty under Section 75A remained undisturbed, resulting in a partial allowance of the appeal.

Ratio Decidendi: Penalty may be waived where the assessee establishes reasonable cause and absence of contumacious conduct, but statutory relief cannot be extended to a penalty not covered by the enabling provision.

---