2012 (8) TMI 749 - HC - Service Tax

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 ... Penalty under Sec. 76 of the Act – Held that:- Assessee has paid both the service tax and interest for delayed payments before issue of show cause notice under the Act - after the payment of service tax and interest is made and the said information is furnished to the authorities, then the authorities shall not serve any notice under sub-section (1) in respect of the amount so paid. Therefore, authorities have no authority to initiate proceedings for recovery of penalty under Sec. 76 of the Act. 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.