Payment of tax and interest before notice bars penalty under Sec. 76 Finance Act.

The Karnataka HC dismissed the appeal, holding that the assessee was not liable to pay a penalty under Sec. 76 of the Finance Act, 1994 as they had paid the service tax and interest before the show cause notice was issued. The court ruled that penalty proceedings cannot be initiated once tax and interest are paid and information is provided to the authorities.

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The Karnataka High Court dismissed the appeal by the assessee challenging the order that they are not liable to pay a penalty under Sec. 76 of the Finance Act, 1994 as they had paid the service tax and interest before the show cause notice was issued. The Court held that authorities cannot initiate penalty proceedings once the tax and interest are paid and information is furnished to them.

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