Penalty waiver for bona fide belief sustained where tax liability arose after the contract was executed.

Penalty waiver under Section 80 of the Finance Act, 1994 was upheld because the assessee's conduct was supported by bona fide belief and reasonable cause: the contract had been executed in 1999, while service tax on such services was introduced later. The Court also refused to consider a new factual contention raised for the first time in appeal, since it had not been placed before the Tribunal or included in the memorandum of appeal. The Tribunal's appreciation of the material was treated as proper, and no interference with the penalty order was warranted.

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Issues: Whether the penalty imposed on the assessee could be set aside under Section 80 of the Finance Act, 1994 on the basis of bona fide belief and reasonable cause.

Analysis: The Tribunal's view that the assessee acted under a bona fide impression was supported by the facts that the contract had been executed in 1999 and the service tax liability for such services was introduced later. The Court also declined to entertain a new factual contention urged for the first time in appeal, as it had not been raised before the Tribunal or in the memorandum of appeal. The findings of the Tribunal were treated as based on proper appreciation of the material and did not warrant interference.

Conclusion: The invocation of Section 80 to waive penalty was upheld and the penalty order was not interfered with.

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