Penalty for failure to pay service tax: time-limited waiver and reduced penalty options for prompt payment after notice or assessment. Failure to pay, short-pay, short-levy or erroneous refund of service tax, absent fraud, collusion, wilful mis-statement, suppression of facts or intentional contravention to evade tax, attracts a penalty in addition to service tax and interest capped at ten per cent. Payments of tax and interest made within a prescribed short period from service of notice attract waiver of the penalty, and payments within a similar period after an assessment order qualify for a reduced penalty. Appeals that increase penalty reset the period for the reduced payment option from the date of the appellate or judicial order.