https://www.taxtmi.com/caselaws?id=31372 Service tax penalties should not be imposed mechanically where tax and interest are paid before the show-cause notice or where reasonable cause, bona fide belief, or delay justification is established; the revisional enhancement of penalties was therefore unsustainable. Reversal of credit also neutralised the consequence of not maintaining separate accounts for exempted clearances, so the 8% demand linked to exempted goods could not stand and denial of exemption under the notification was set aside. The stated rationale was that service tax law promotes voluntary compliance and that credit reversal can cure the alleged breach in relation to common inputs and exempt supplies. en-us Wed, 09 Jul 2008 00:00:00 +0530 Mon, 21 Apr 2014 15:53:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=31372 Service tax penalties should not be imposed mechanically where tax and interest are paid before the show-cause notice or where reasonable cause, bona fide belief, or delay justification is established; the revisional enhancement of penalties was therefore unsustainable. Reversal of credit also neutralised the consequence of not maintaining separate accounts for exempted clearances, so the 8% demand linked to exempted goods could not stand and denial of exemption under the notification was set aside. The stated rationale was that service tax law promotes voluntary compliance and that credit reversal can cure the alleged breach in relation to common inputs and exempt supplies. Case-Laws Service Tax Wed, 09 Jul 2008 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=31372