ORDER
S.L. Peeran, Member (J)
1. By this appeal Revenue is challenging the correctness of the Order-in-Appeal No. 496/2000-C.E., dated 6-9-2000 by which the Commissioner has noted that the lower authority was not justified in imposing a huge penalty of Rs. 1,03,200/- for delayed payment of service tax of Rs. 13,731/-. He has noted that the assessee had not paid the service tax in time due to some confusion in the initial stage as it was a new levy. He has noted that appellants on coming to know about the levy immediately paid the service tax along with interest for the delayed period. He has noted that assessee did not have any intention to evade the payment of service tax and therefore imposition of such huge penalty especially when a new levy had been introduced was not justified. Revenue contend in this appeal that the service tax for the period April, 1997 to June, 1997 was Rs. 13,731/- and the original authority had imposed a penalty of Rs. 1,03,200/- which should be restored despite the assessee having voluntarily paid the service tax along with interest in November, 1996.
2. We have heard ld. SDR in the matter. The respondents were served the notice yet they have not appeared for the hearing.
3. We notice from the judgment of this Bench in the case of Smitha Shetty v. CCE, Bangalore [2003 (156) E.L.T. 84] that the Bench has examined this very issue in the light of the several judgments of the Tribunal and Apex Court and has come to the conclusion that when there is technical or judicial breach of the provisions of the Act or where the Breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute then in such circumstance, in the light of the Apex Court judgments, penalty was not imposable. It also set aside the enhanced penalty imposed by the reviewing authority. The Tribunal noted that the discretion to impose penalty to be exercised judicially after considering the relevant circumstances. The ruling of the Apex Court rendered in the case of Hindustan Steel v. State of Orissa [1978 (2) E.L.T. (J 159) (S.C.)] was considered wherein it was held that an order imposing penalty for failure to carry out the statutory obligation is the result of quasi-criminal proceedings and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contentions
or dishonest or acted in conscious disregard of its obligation. It also held that
penalty will not also be imposed for failure to perform the statutory obligation is
a matter of discretion of the authority to be exercised judicially and on a consideration of the relevant circumstances. We find that the Commissioner (Appeals)has noted that the service tax was a new levy and the assessee did not know about the promulgation of the levy. They had deposited the service tax along with interest and in view of this fact the Commissioner found the action of the assessee to be bona fide and in that circumstance felt that exorbitant penalty of Rs. l,03,200/- for a service tax of Rs. 13,731/- was not imposable. We have examined the issue and find that the Commissioner was justified in setting aside such an exorbitant penalty and the same is in light of the law laid down by the Tribunal in the case of Smitha Shetty v. CCE (supra) which examined the rulings of the Tribunal, High Court and Supreme Court judgments. We do not find any merit in the appeal and the same is rejected.