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2012 (9) TMI 236 - HC - Service TaxPenalty - Scientific and Technical Consultancy Service – non-payment of service tax – assessee submitted that in respect of grant-in-aid consultations, service tax is not payable as per the guidelines issued by the Central Excise Department and CSIR and that the short payment of service tax was under bona fide condition of not properly classifying the funds received by IICT under dutiable consultation charges and exempted charges – Held that:- Penalty proceedings are not automatic and there ought to be necessary material to show that the assessee is guilty of willful suppression, fraud and misrepresentation. Under Section 80 of the Act if the assessee proves that there was a reasonable cause for the failure to pay the service tax, the competent authority can always drop the penalty proceedings. The question of penalty proceedings would arise only when there could be valid recovery proceedings under Section 73(1) of the Act. That is the reason when the ‘non obstante’ clause in Section 80 refers to only Sections 76, 77 and 78 and not to Section 73 of the Act. When the limitation period under Section 73(1) of the Act has expired and when the case does not fall under the proviso thereto, the question of penalty proceedings would not arise. Extended period of limitation – Held that:- Issue of show cause notice dated 21-2-2006 requiring to pay the service tax for the period from 16-7-2001 to 9-9-2004 - non-payment of service tax in respect of five above named projects is due to bona fide doubt regarding the activity
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