Penalty under section 76 required recalculation where service tax collection began later, so the default period had to be reworked.

Penalty under section 76 of the Finance Act, 1994 required recalculation because service tax was collected from customers only from October 2006 and not throughout the entire disputed period. The daily-rate penalty had been applied for the full period without matching the factual sequence of collection and non-payment, so the quantum was found to need reconsideration on the actual period of default. The penalty under section 76 was set aside to that extent and the matter was remitted for fresh reworking after granting the assessee a reasonable opportunity of hearing.

---

---

Issues: Whether the penalty imposed under section 76 of the Finance Act, 1994 required reworking on the basis that service tax was collected from customers only during a later period and not throughout the entire disputed period.

Analysis: The penalty had been computed by applying the daily rate for the whole period, although the service tax collection from customers was staggered and commenced only from October 2006. Since liability to penalty under section 76 depended on the relevant factual sequence of collection and non-payment, the quantum required reconsideration in light of the actual period during which tax was collected.

Conclusion: The penalty was set aside to the extent it was imposed under section 76 and the matter was remitted for fresh reworking of the penalty after granting a reasonable opportunity of hearing to the assessee.

---