Penalty for failure to pay service tax tightened; reduced penalty available on prompt payment after notice or modification.

Clause 111 replaces section 76 to impose liability on a person served with a section 73(1) notice to pay service tax, interest and a penalty not exceeding ten per cent. where tax has not been levied, short-levied, short-paid or erroneously refunded except in cases of fraud, collusion, wilful misstatement, suppression or contravention with intent to evade; provisos allow waiver or reduction of penalty on prompt payment and appellate modification adjusts the penalty with similar prompt-payment benefit.

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