Tribunal partially allows appeal, waives penalties under Section 78, upholds interest demand.

The appeal was partly allowed by the Tribunal, setting aside penalties under Section 78 of the Finance Act, 1994, and upholding the interest demand for non-payment of service tax. The Tribunal considered the appellant's sufficient CENVAT credit balance, indicating no deliberate intention for non-payment, and waived penalties under Section 80. The appellant paid late fees for return filing delay, exempting penalty under Section 77, but interest was upheld due to admitted delay in service tax payment, irrespective of payment source.

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Issues:
Appeal against order-in-appeal upholding penalty and interest under Sections 77, 78, and 75 of Finance Act, 1994 for non-payment of service tax.

Analysis:
The appellant did not pay service tax for January 2013 to March 2014, filed belated returns in February 2014 showing service tax debited from CENVAT credit account, seeking waiver of penalties and interest. Appellant's representative argued no delay in payment as CENVAT credit balance covered tax liability. Revenue contended statutory requirement to pay service tax on due date regardless of credit balance, citing non-payment consequences. Tribunal noted delay in filing returns, with timely filing for a later period. Tribunal found appellant had sufficient CENVAT credit balance, indicating no mala fide intention for non-payment. Waived penalty under Section 78 invoking Section 80 of Finance Act, 1994. Appellant paid late fees for return filing delay, exempting penalty under Section 77 per Rule 7(C) of Service Tax Rules, 1994. Upheld interest demand due to admitted delay in service tax payment, irrespective of payment source, as interest is integral to tax liability. Partly allowed appeal by setting aside penalties and upholding interest demand.

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