Penalty under Section 78 sustained for delayed GTA service tax payment with unpaid interest

Penalty under Section 78 of the Finance Act, 1994 was sustained because service tax on GTA services was not discharged within the due period and the interest component also remained unpaid. Later payment of the tax did not cure the default or remove the basis for penal action, so interference with the penalty was not justified.

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Issues: Whether penalty under Section 78 of the Finance Act, 1994 was sustainable where service tax on GTA services had not been discharged during the relevant period and the interest remained unpaid.

Analysis: The liability to service tax on GTA services for the relevant period was not discharged when due. Although the tax was paid later, the interest component was still unpaid, and the belated payment did not erase the default so as to justify interference with the penalty imposed under Section 78.

Conclusion: The penalty under Section 78 of the Finance Act, 1994 was upheld against the assessee.

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