Concessional penalty and bar on multiple service tax penalties where tax was paid early and Section 78 penalty covered the default.

Concessional penalty was available where the assessee paid service tax before the show cause notice and paid interest within the stipulated time after adjudication, especially since the original authority did not extend the statutory option for reduced penalty. The Tribunal also treated the default covered by Section 78 as encompassing the Section 76 lapse, and applied the settled view that separate penalty under Section 76 was not warranted once penalty under Section 78 was imposed, even for the period before the 10.05.2008 amendment. Penalty under Section 77 was likewise unsustainable on the facts.

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Issues: Whether the assessee was entitled to the benefit of concessional penalty and whether separate penalties under Sections 76 and 77 were sustainable when penalty under Section 78 had been imposed.

Analysis: The assessee had paid the service tax before issue of the show cause notice and the interest within the stipulated time after adjudication. The original authority did not extend the option to pay reduced penalty contemplated by the proviso to Section 11AC of the Central Excise Act, 1944. In such circumstances, the benefit of concessional penalty was available. On the question of multiple penalties, the offence covered by Section 78 was treated as including the default punishable under Section 76. The established view applied by the Tribunal was that, even for the period prior to the amendment of Section 78 with effect from 10.05.2008, separate penalty under Section 76 was not warranted once penalty under Section 78 was imposed. The setting aside of penalty under Section 77 was also justified on the facts.

Conclusion: The assessee was entitled to the concessional penalty benefit, and the separate penalties under Sections 76 and 77 were not sustainable.

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