Credit for Penalty

[Harsh Jindal]

Can an assessee take the credit of the penalty deposited alongwith the tax?

[YAGAY andSUN]

Penalties are levied for non compliances of an Act, Rule etc. and are in punitive nature.  Hence, no Service Tax will be allowed on penalties.

AI Summary

Penalty credit disallowed: penalties are punitive and cannot be claimed as service tax credit under the statute. Credit for penalties deposited with tax is not permissible because Penalties are punitive in nature and do not qualify for service tax credit; amounts levied as punishment for non compliance cannot be treated as input tax or used to reduce tax liability.