Service tax penalties on architects were set aside where payment followed vacation of a High Court stay and no mala fide was shown.

Personal penalties on architects for non-payment of service tax and non-filing of returns during the currency of an interim High Court stay were held unsustainable because the levy had been stayed, and the tax with interest was paid after the stay was vacated. On the facts recorded, the Tribunal found no mala fide conduct in the delayed payment and no adequate basis for penalty. The penalties were set aside and the appeals were allowed.

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Issues: Whether personal penalties imposed on architects for non-payment of service tax and non-filing of returns during the currency of an interim stay granted by the High Court were sustainable.

Analysis: The Tribunal noted that the service tax levy on architects had been stayed by the High Court of Madras and that the appellants paid the tax with interest after learning of vacation of the stay. In these circumstances, the Tribunal held that the failure to deposit tax could not be characterised as mala fide. The Tribunal also found that the basis for imposing penalties was not justified on the facts recorded.

Conclusion: The penalties were set aside and the appeals were allowed in favour of the appellants.

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