Delhi HC holds that Bona Fide Tax Interpretation Can Defeat Service Tax Penalty

Hospitech Management Consultants accepted the service tax liability for the normal period but challenged the penalty imposed under Section 78. Delhi HC held that the assessee had acted under a bona fide belief supported by contemporaneous departmental correspondence treating the services as non-taxable, and that the Tribunal's finding of absence of suppression had attained finality. The penalty was therefore set aside under Section 80.