Bona Fide Belief

A Department That Once Agreed With You Cannot Later Call You a Suppressor: Delhi High Court Sets Aside Service Tax Penalty on Construction Services to Government Hospitals and Educational Institutions

Two officers of the Service Tax Department told the audit wing, in writing, that a construction consultant's work for government hospitals and colleges was not taxable. Nineteen years and one appeal later, the Delhi High Court held that the Department could not turn around and call the same conduct wilful suppression warranting penalty, even after upholding the underlying demand for the last nine months of a five-year dispute.