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2019 (1) TMI 1121 - MADRAS HIGH COURTQuantum of penalty u/s 78 of FA - failure to pay service tax within the due dates - the entire service tax along with interest were paid before filing of reply to the SCN - suppression of facts or not? - Whether the Tribunal was right in not waiving the entire penalty imposed on the appellant vide the Order-in-Original dated 19.12.2008, but granting only partial relief of reducing penalty to 25% of the amount as imposed in the said Order-in-Original dated 19.12.2008. Held that:- The crucial words in Section 78(1) of the Finance Act, 1994 are 'by reason of fraud or collusion' or 'willful misstatement' or 'suppression of facts'. These words should be read in conjunction with 'the intent to evade payment of service tax'. However, there is no finding rendered by the Adjudicating Authority stating that there was either fraud or collusion or willful misstatement or suppression of facts or contravention of the provisions of Chapter V with an intent to evade payment of service tax. Therefore, in the strict sense of the matter, without a finding rendered by the Adjudicating Authority that there was an intention to evade payment of service tax, under normal circumstances, penalty could not be imposed. However, the facts of the case have not fully convinced us to waive the entire penalty, as there has been chronic default committed by the assessee in regular intervals by failing to pay the service tax within the time permitted under the Statute. Hence, this can be taken as a mitigating factor to reduce penalty, but not to waive the entire penalty. The order passed by the Tribunal is modified to the extent of reducing penalty to 10% of the penalty imposed under Section 78 of the Finance Act, 1994 vide the Order-in-Original dated 19.12.2008 - appeal allowed in part.
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