Service tax penalties fail absent suppression of facts when higher turnover is disclosed on enquiry.

Penalty under the service tax provisions was not sustainable where the record did not establish suppression of facts or contumacious conduct. The assessee-hospital had rendered taxable health services, but the revenue first obtained information from the insurer and the assessee then disclosed the higher turnover on enquiry. On those facts, invocation of the extended period and penalties under Sections 70, 77 and 78 were not justified, and the appellate authority's deletion of the penalties was upheld.

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Issues: Whether the penalties imposed under Sections 70, 77 and 78 were liable to be sustained in the absence of suppression of facts or contumacious conduct.

Analysis: The respondent hospital rendered taxable health services during the relevant period, but the record showed that the revenue obtained information from the insurance company and, on further enquiry, the respondent disclosed the higher turnover relating to such services. On these facts, there was no material to establish suppression of facts or any contumacious conduct warranting invocation of the extended period or imposition of penalty. The appellate authority had therefore deleted the penalties correctly, and the cited decisions on different facts did not assist the revenue.

Conclusion: The penalties under Sections 70, 77 and 78 were rightly set aside and the revenue's challenge failed.

Final Conclusion: The appellate order deleting the penalties was upheld and the revenue appeal stood dismissed.

Ratio Decidendi: Penalty under the service tax provisions cannot be sustained where the record does not establish suppression of facts or contumacious conduct, particularly when the assessee's higher turnover is disclosed on enquiry.

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