Penalty provisions ...

[Rizwan Ullah]

During CERA Audit for the pre GST period, Auditors raised a para regarding deposition of service tax under RCM on Ocean Freight. We were actually unaware of such developments and due to ignorance we didn't comply on deposition of service tax under rcm on goods imported during 2016-17. Once Audit Para was raised by the Audit Team, we deposited the amount along with interest applicable for the period in dispute .

Now Department is forcing us to deposit penalty as well @ 15% of service tax. Is penalty provision applicable. Kindly suggest

AI Summary

Voluntary payment under Section 73 prevents penalty where service tax and interest are deposited after audit detection.
A voluntary payment of service tax and interest, informed to the tax officer before issuance of a show-cause notice, prevents initiation of proceedings and precludes imposition of penalty under the service tax statutory framework; Central Excise Act and Rules do not apply to service tax liabilities on reverse-charge ocean freight, and tribunal and high court precedents support non-imposability of penalty where tax plus interest have been deposited after audit detection.