Waiver of penalty

This query is : Resolved

M Sivagopal (Querist)
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16 November 2012 is there any case laws available for waiver of penalty. The penalty arises due to default in payment and late payment of service tax.

CA Ravi Kumar Murugesh

CA Ravi Kumar Murugesh (Expert)
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16 November 2012 As per Service tax laws, interest is mandatory and penalty is discretionary.
Imposing of penalty by the department always depends on how early you have paid the service tax outstanding with interest. If they identify your default before your remittance then there will be definately no chance to avoide penalty but if you remit the entire tax liabilty with interest and submitted the ST return then the chances of imposing penalty is rare and almost nil.
In most of the case laws, courts have held the same thing.You should keep in mind, that the entrire thing of payment and return file should happen before issue of Show cause notice by the department.Please note that Suppressing the value of taxable service always attracts Penalty — 100% to 200% of the service tax.
Further, the Central Excise Officer has the discretion to waive of penalty u/s 78 on ‘reasonable cause’ which would be available only where true and complete details of transactions are available in the ‘specified records’ and not in other cases. The Finance Act, 2011 has sought to provide for a reduction in penalty u/s. 78 where true and complete details of transactions are available in the "specified records’ In such cases, the aforesaid penalty would be only 50% of the tax involved. A further reduction of the penalty in such cases (i.e where true and complete details of transactions are available in the ‘specified records’) to 25% of the tax involved is also sought to be provided if the tax, interest and penalty of 25% of the tax is paid within 30 days. The Finance Act, 2011 has also introduced the prosecution under service tax law by enacting a new section 89