Court affirms penalty under Finance Act despite tax payment. Evidence supports tax collection without remittance. Appeal dismissed.

The court upheld the decision of the Customs, Excise and Service Tax Appellate Tribunal, affirming the penalty imposed under Section 78 of the Finance Act despite the payment of service tax and interest before the show cause notice. The appellant's argument of innocence was rejected as evidence showed collection of service tax without remittance. The court found no legal errors, dismissed the appeal, and closed the connected miscellaneous petition without costs.

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Issues:
1. Interpretation of Section 80 of the Finance Act in relation to Sections 76, 77, and 78.
2. Imposition of penalty under Section 78 of the Finance Act despite payment of service tax and interest before the show cause notice.

Analysis:
1. The appellant challenged the order of the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai, questioning the lower authorities' failure to exercise power under Section 80 of the Finance Act for Section 78, similar to Sections 76 and 77. The court considered whether the Tribunal was correct in confirming the penalty under Section 78 when the service tax and interest were paid before the show cause notice. The appellant argued innocence due to a genuine belief that their services were not taxable, but evidence showed they collected service tax without remitting it.

2. The central issue was the liability of the assessee for the penalty imposed by the respondent. The show cause notice from 27.02.2008 was upheld in subsequent orders, indicating a consistent stance by the authorities. The appellant claimed innocence based on a belief about the nature of their services, but the record demonstrated collection of service tax without submission to the Department. Despite the appellant's contentions, the court found no merit in their plea of innocence or bona fides, as the factual evidence contradicted their claims.

3. The court concluded that the appellant's argument did not stand against the evidence of collecting service tax but failing to remit it. Consequently, the Tribunal's decision was upheld, dismissing the appeal. The court found no legal errors or substantial questions of law to consider, leading to the dismissal of the appeal without costs. The connected miscellaneous petition was also closed as a result of the judgment.

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