Reasonable cause under Section 80 justifies waiver of service tax penalty after pre-notice payment and interest.

Penalty for non-payment of service tax under Sections 76 and 77 of the Finance Act, 1994 was held liable to be waived under Section 80 because the appellant had paid the entire tax liability with interest before issuance of the show-cause notice. On those facts, the delay was treated as not warranting penal consequences, and the statutory reasonable-cause provision was applied. The penalty confirmed by the lower authority was therefore found unsustainable and was set aside, with relief granted to the appellant.

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Issues: Whether penalty imposed for non-payment of service tax under Sections 76 and 77 of the Finance Act, 1994 was liable to be set aside by invoking Section 80 of the Finance Act, 1994.

Analysis: The appellant had discharged the entire service tax liability along with interest before issuance of the show-cause notice. In the facts and circumstances, the delay was treated as not warranting penal consequences, and the statutory provision enabling waiver of penalty for reasonable cause was held applicable. The penalty sustained by the lower authority was found unsustainable.

Conclusion: Penalty was set aside and relief was granted to the appellant.

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