Reasonable cause can waive service tax delay penalty; nominal tax effect left the reduced penalty undisturbed.

Penalty for delayed deposit of service tax was examined in light of the nominal revenue effect and the availability of reasonable cause under Section 80 of the Finance Act, 1994. The Court noted that, where reasonable cause for the delay is established, penalty may be waived under that provision. On the facts noted, the penalty had already been reduced by the appellate authority and upheld by the Tribunal, and the appeal was not entertained, leaving the reduced penalty undisturbed.

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Issues: Whether penalty for delayed deposit of service tax was liable to be interfered with in the appeal, having regard to the low tax effect and the availability of reasonable cause under the governing provision.

Analysis: The appeal arose from a penalty imposed for delay in depositing service tax, which had already been reduced by the appellate authority and upheld by the Tribunal. The Court noted that the revenue effect was only nominal, and further observed that where reasonable cause for failure to deposit service tax within the stipulated period is established, the penalty can be waived under Section 80 of the Finance Act, 1994.

Conclusion: The appeal was not entertained and the assessee retained the benefit of the reduced penalty.

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