TaxTMI 
TaxTMI 
SIR,
WE HAVE PAID OUR FULL SERVICE TAX LIABILITY BEFORE ISSUE OF SCN. WE HAVE ALSO PAID INTEREST ON THE SAME AFTER OIO ADJUDICATED/PASSED. DO WE ELIGIBLE FOR PENALTY WAIVE U/S 78. PL. QUOTE SUPPORTING CASE LAWS IN THIS MATTER.
THANK YOU
PENALTY U/S 78 IF SERVICE TAX HAS BEEN DEPOSTED BEFORE SCN
02 Dec 2015 
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Penalty under Section 78: reduced relief depends on timing of tax, interest and penalty deposits and culpability.
Reduced penalty relief under the Finance Act depends on timing of tax and interest payments and on whether elements of suppression or fraud exist. If tax and interest and a stipulated part of penalty are deposited within prescribed periods tied to either the show cause notice or the adjudication order, reduced penalty rates apply; payments made before notice or a hybrid payment sequence can foreclose favourable concessions. Reversal of cenvat credit with interest during audit generally negates the need for a show cause notice and, absent mens rea, penalty should not be invoked; discrepancies between returns and books, however, are treated as concealment and attract heavier penalty exposure. (AI Summary)
Reduced penalty relief under the Finance Act depends on timing of tax and interest payments and on whether elements of suppression or fraud exist. If tax and interest and a stipulated part of penalty are deposited within prescribed periods tied to either the show cause notice or the adjudication order, reduced penalty rates apply; payments made before notice or a hybrid payment sequence can foreclose favourable concessions. Reversal of cenvat credit with interest during audit generally negates the need for a show cause notice and, absent mens rea, penalty should not be invoked; discrepancies between returns and books, however, are treated as concealment and attract heavier penalty exposure. (AI Summary)