Service tax penalty relief denied where prior tax payment showed awareness of liability and no bona fide belief was proved.

Penalties for failure to pay service tax on time and file returns were upheld because the assessees were already aware of their tax liability, having paid service tax for an earlier period. No bona fide belief was established, and no request for protection under the penalty waiver provision was raised before the lower authorities. The tribunal also noted that financial hardship is not a valid ground to avoid statutory penalties. As a result, the penalties imposed for the compliance defaults were sustained.

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Issues: Whether the penalties imposed under Sections 76 and 77 of the Finance Act, 1994 were liable to be set aside by invoking the protection under Section 80 of the Finance Act, 1994.

Analysis: The appellants were found to have been aware of their liability to pay service tax, having paid tax for the earlier period. No plea for the benefit of Section 80 was raised before the lower authorities, and no bona fide belief was established to justify non-payment by the due date or failure to file returns. Financial hardship was held not to constitute a ground for avoiding penalty.

Conclusion: The penalties under Sections 76 and 77 were sustained and the appeal was rejected.

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