Karnataka HC upholds no penalty for Service Tax compliance

The Karnataka HC dismissed the assessee's appeal, upholding the order that found the assessee not liable for penalty under Sec. 76 of the Finance Act, 1994. The assessee's timely payment of Service Tax and interest prior to the show cause notice precluded penalty proceedings under Sec. 76, as per Sub-Sec.(3) of Sec. 73 of the Act.

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The Karnataka High Court dismissed the appeal by the assessee challenging the order that held the assessee not liable for penalty under Sec. 76 of the Finance Act, 1994. The assessee had paid both Service Tax and interest before the show cause notice was issued, as required by Sub-Sec.(3) of Sec. 73 of the Act. This meant authorities could not initiate penalty proceedings under Sec. 76.

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