Reasonable cause defeats service tax penalty where delay was explained by office shift and personal difficulty.

Reasonable cause for delayed payment of service tax can defeat penalty under the Finance Act, 1994 where the assessee proves sufficient explanation for the default. The assessee cited shifting of office premises and personal difficulty, and the record was treated as showing reasonable cause within the protective scope of section 80, under which no penalty is imposable when such cause is established. Applying that settled principle, the enhanced penalty under section 76 was not sustainable and was set aside.

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Issues: Whether enhancement of penalty under section 76 of the Finance Act, 1994 was sustainable when the assessee showed reasonable cause for delayed payment of service tax.

Analysis: The appellant explained the default by reference to shifting of office premises and personal difficulty. The record showed reasonable cause for the failure to pay service tax within time, attracting the protective provision under section 80 of the Finance Act, 1994, under which no penalty is imposable where such cause is proved. In view of the settled principle applied in earlier Tribunal and High Court rulings, the enhanced penalty could not be sustained.

Conclusion: The enhancement of penalty was set aside and the appeal was allowed.

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