Revisional penalty enhancement for initial service tax delays set aside where a newly registered assessee showed progressively reducing delays.

For a newly registered assessee facing the initial application of service tax, the Tribunal held that the revisional enhancement of penalty for delayed filing and payment could not be sustained, particularly where the delays showed a progressive reduction and earlier lenient Tribunal decisions applied. The enhanced penalty imposed in revision was set aside. The original penalty order of the Deputy Commissioner was not challenged separately and therefore remained undisturbed.

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Issues: Whether the enhanced penalty imposed in revision for delayed payment of service tax by a newly registered assessee was sustainable, and whether interference with the original penalty order was warranted.

Analysis: The service tax was a newly introduced levy for the assessee, and the delays in filing and payment for the initial months showed a progressive reduction. The Tribunal followed its earlier decisions that, in such circumstances, the entire penalty could be set aside, and held that the revisional order enhancing the penalties could not be sustained. No separate challenge was pressed against the original order of the Deputy Commissioner, which therefore remained unaffected.

Conclusion: The enhanced penalty imposed by the Commissioner was set aside, and the assessee succeeded. The original order of the Deputy Commissioner was left undisturbed.

Final Conclusion: The appeal was allowed and the assessee was relieved from the revisional enhancement of penalty, while the original adjudication was not interfered with.

Ratio Decidendi: Where service tax is a newly introduced levy and the assessee is newly registered, a revisional enhancement of penalty for initial delayed payments may be set aside, particularly when the delays are progressively reduced and the Tribunal's earlier lenient approach applies.

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