Suppression with intent to evade tax defeats reduced penalty relief when statutory conditions for concession are unmet.

Non-cooperation with investigation, withholding of primary records, and mismatch between recorded receipts, balance sheets, and ST-3 returns supported a finding of deliberate suppression with intent to evade service tax. Bona fide calculation error was rejected on the facts. The benefit of reduced mandatory penalty of 25% was held unavailable because the statutory conditions for such reduction were not satisfied, and the earlier contrary Gujarat view was treated as no longer good law. The penalty was therefore sustained and the challenge failed.

---

---

Issues: Whether the appellant was liable to penalty for suppression of facts with intent to evade service tax, and whether the benefit of reduced mandatory penalty of 25% could be extended.

Analysis: The appellant did not cooperate with the investigation, did not produce basic records such as bill books and account books, and the department had to gather the relevant data from BSNL offices. The recorded receipts did not match the balance sheets and the non-disclosure of services in the ST-3 returns supported a finding of deliberate suppression. In view of this conduct, the plea of bona fide calculation errors was rejected. On the reduced penalty aspect, the earlier Gujarat view relied upon by the appellant was held to be no longer good law in light of later binding judicial developments, and the benefit of reduced penalty was held to be unavailable where the statutory conditions were not met.

Conclusion: The penalty was rightly sustained, and the benefit of reduced mandatory penalty of 25% was not available to the appellant.

Final Conclusion: The challenge to the penalty failed, and the appeal stood dismissed.

Ratio Decidendi: Where non-cooperation and withholding of primary records establish suppression with intent to evade tax, reduced penalty cannot be granted unless the statutory conditions for such reduction are satisfied.

---