Penalty under Section 78 requires proved suppression or wilful misstatement; voluntary compliance defeats the Revenue's case.

Penalty under Section 78 of the Finance Act, 1994 is not sustainable unless the Revenue proves suppression of facts or wilful misstatement with intent to evade service tax by cogent evidence. Here, the assessee had voluntarily obtained registration, paid tax, and corresponded with the department on liability, and no material supported the allegation of evasion. The appellate finding of no suppression was not displaced by the Revenue, so the penalty was correctly waived.

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Issues: Whether penalty under Section 78 of the Finance Act, 1994 was exigible on the facts, and whether the Revenue could establish suppression of facts or wilful misstatement with intent to evade service tax.

Analysis: The assessee had voluntarily obtained service tax registration, paid tax, and corresponded with the department regarding its liability. On the factual matrix, the appellate authority found no material showing suppression of facts or wilful misstatement with intent to evade tax. The Revenue did not dislodge that finding by any cogent evidence, and a bare assertion of suppression was insufficient to sustain the penalty.

Conclusion: Penalty under Section 78 was rightly waived, and the Revenue's challenge failed.

Final Conclusion: The decision affirms that penalty under Section 78 cannot be sustained in the absence of proved suppression or wilful misstatement with intent to evade duty.

Ratio Decidendi: Penalty under Section 78 of the Finance Act, 1994 is not sustainable unless the Revenue establishes suppression of facts or wilful misstatement with intent to evade tax by cogent evidence.

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