CESTAT holds Bona Fide Non Payment Does Not Invite Section 78 Penalty

PrideCo provided commercial construction services to WBHIDCO but did not charge or pay Service Tax, believing the recipient would pay the tax directly. 

After the Department issued a demand, WBHIDCO released the tax amount and PrideCo paid the entire Service Tax with interest before the adjudication order.

CESTAT held that the Revenue had not established suppression with intent to evade and therefore restored the dropping of the Section 78 penalty.