Service tax penalties fail without suppression or intent to evade, while the conceded tax demand remains sustainable.

Penalties under the service tax law were held unsustainable where the show cause notice did not contain a meaningful allegation of suppression or intent to evade tax, and the assessee showed reasonable cause. The assessee accepted liability for the service tax demand, so the demand was sustained on that concession. However, in the absence of the required allegation and statutory basis for penalty, the penalties were set aside.

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Issues: Whether penalties under the service tax law were liable to be sustained when the show cause notice did not allege suppression or intention to evade tax, and whether the tax demand could be upheld in view of the assessee's concession.

Analysis: The assessee fairly accepted liability for the service tax amount, and the only surviving question was the sustainability of penalties. The show cause notice did not contain any meaningful allegation of suppression or any intent to evade tax. In the absence of such allegation, and considering the statutory relief available on proof of reasonable cause, the conditions for imposing penalties were not made out.

Conclusion: The service tax demand was sustained on the assessee's concession, but the penalties were set aside.

Ratio Decidendi: In the absence of a substantive allegation of suppression or intention to evade tax, penalties under the service tax law are not sustainable where reasonable cause is shown.

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