Karnataka HC upholds tribunal decision on penalty under Finance Act, 1994

The Karnataka HC upheld the tribunal's decision to set aside the penalty under section 78 of the Finance Act, 1994. The court held that payment of service tax and interest before the show cause notice precludes penalty recovery notices. The revenue's appeal was dismissed, ruling in favor of the assessee.

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The Karnataka High Court upheld the tribunal's decision to set aside the penalty imposed under section 78 of the Finance Act, 1994. The court ruled that once the service tax and interest were paid before the show cause notice, authorities cannot issue any notice for penalty recovery. The appeal by the revenue was dismissed, and the judgment favored the assessee.

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