Service tax penalty reduced to half where demand rested on the assessee's own records and admission of non-payment.

Non-registration and non-payment of service tax, supported by the manager's admission and the appellant's own records, established suppression and liability to penalty under Section 78 of the Finance Act, 1994. Financial difficulty was not accepted as a valid excuse for failure to register. The admission required no further proof under Section 58 of the Indian Evidence Act, 1872. As the demand was based on the appellant's maintained records, the first proviso to Section 78(1) applied, so the penalty was confined to 50% of the tax liability.

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Issues: Whether the penalty imposed under Section 78 of the Finance Act, 1994 was liable to be reduced to 50% of the tax liability in the facts of the case.

Analysis: The service provider had not obtained registration or paid service tax for the relevant period, and the admission made through the statement of its manager supported the finding of non-payment and suppression. The Court held that financial difficulty was not a valid excuse for non-registration. It further noted that an admission requires no further proof under Section 58 of the Indian Evidence Act, 1872. Since the demand was raised on the basis of records maintained by the appellant, the first proviso to Section 78(1) of the Finance Act, 1994 applied and the penalty was restrictable to 50% of the tax liability.

Conclusion: The penalty was correctly payable, but only to the extent of 50% of the total duty liability, and the appellant succeeded to that limited extent.

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