1. This appeal filed by the department prays for imposition of penalty on the respondent under Section 78 of the Finance Act 1994. The learned Additional Commissioner (AR) reiterates the grounds of this appeal. No representation for the respondent despite notice, nor any request of theirs for adjournment.

2. In adjudication of a show-cause notice dated 04.09.2008, the Assistant Commissioner had confirmed a demand of Rs. 1,03,009/-against the assessee (respondent) towards service tax and education cesses under the head "Goods Transport Agent's Service" (GTA service for short) for the period from January 2005 to March 2008 and had also demanded interest thereon and had also imposed Mate fee' of Rs. 14,000/- on the assessee. The full payments made by the assessee towards service tax + education cesses, interest thereon and late fee were also appropriated by the adjudicating authority. Though, in the show-cause notice, there was a proposal to impose penalties on the assessee under Sections 76, 77 and 78 of the Finance Act 1994, none of these penalties was imposed by the adjudicating authority. Therefore, the Assistant Commissioner's order was accepted by the assessee. The department, however, was not happy with the non-imposition of penalties on the party. Therefore, under Section 84 of the Act, the jurisdictional Commissioner as revisionary authority issued a show-cause notice to the assessee requiring them to show-cause why penalties under Sections 76, 77 and 78 of the Act should not be imposed on them. This penal proposal was contested by the party. The impugned order was passed by the Commissioner in adjudication of this dispute. The revisionary authority dropped the proposal for imposition of penalty on the assessee under Section 78 of the Act, though it imposed penalties on them under Sections 76 and 77 of the Act. The present appeal of the department is directed against the Commissioner's decision under Section 78 of the Act.

3. On a perusal of the records, I find that the respondent was a recipient of GTA service during the material period. They had not paid service tax on the subject service for the subject period (January 2005 to March 2008). However, when investigations were launched by the department, the assessee paid the tax with interest thereon on 02.06.2008. They also paid an amount of Rs. 14,000/- towards 'late fee' under Section 70 of the Act read with Rule 7C of the Service Tax Rules 1994. Nevertheless, show-cause notice dated 04.09.2008 came to be issued to them demanding service tax + education cesses, interest thereon, late fee etc. and proposing penalties under Sections 76 to 78 of the Act. What happened subsequently has already been noted hereinbefore.

4. After hearing the learned Additional Commissioner (AR), I note that, as regards Section 78 penalty, the case of the appellant is that this is not a fit case for grant of the benefit of Section 80 of the Act to the assessee. The appellant submits that the respondent had an intention to evade payment of service tax and hence suppressed material facts. It is submitted that the respondent did not care to obtain registration for payment of service tax on GTA service and also did not file service tax returns for the period of dispute. It was in such circumstances that the extended period of limitation prescribed under the proviso to Section 73(1) of the Act was invoked for recovery of service tax. In the same circumstances, Section 78 of the Act was invoked to impose penalty on the assessee. The learned Additional Commissioner (AR) submits that these circumstances were tacitly acknowledged and admitted by the assessee by paying up the entire amount of service tax + education cesses with interest thereon and by not seeking to challenge the order-in-original passed by the Assistant Commissioner. Therefore, according to the learned Additional Commissioner (AR), the dropping of penal proposal under Section 78 of the Act by the Commissioner on the premise that the