Taxpayer-friendly scheme immunity protected service providers from penalty after timely payment of service tax and interest.

The Extra Ordinary Tax Payer Friendly Scheme granted immunity from penal action to service providers who registered by 30-10-2004 and paid service tax within the scheme period. Where the respondents had paid the tax with interest before that date, the Tribunal accepted that the scheme benefit applied and no penalty could be sustained. The operative effect was that timely compliance under the scheme protected the respondents from penal liability.

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Issues: Whether the respondents were liable to penalty after payment of service tax with interest before 30-10-2004 under the Extra Ordinary Tax Payer Friendly Scheme.

Analysis: The scheme circulated by letter dated 23-9-2004 granted immunity from penal action to service providers who got registered up to 30-10-2004 and paid service tax within the scheme period. The respondents had paid the tax with interest before that date, and the Tribunal found no infirmity in the Commissioner (Appeals)'s view that the benefit of the scheme extended to them.

Conclusion: The respondents were not liable to penalty.

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