Service tax interest vs penalty

Payment of interest on "delayed" payment of Service Tax is mandatory. It is advisable to pay interest suo-moto.

As regards payment of penalty-

In case not involving suppression- [Sec 76 of Finance Act, 1994]

(i) if S.Tax is paid before notice or within 30 days of notice, no  penalty is payable.

(ii) Penalty of 25% of (10%) is payable if S.Tax, Interest & penalty [25% of (10%)] is paid 30 days after notice but within 30 days of recept of Order.

(iii) Beyound that the penalty payable is 10% of S.Tax involved.

In case  involving suppression- [Sec 78 of Finance Act, 1994]

(i) If S.Tax, interest & 15% penalty is paid before notice or within 30 days of notice, penalty @ 15% is payable.

(ii) Penalty of 25% of (100%) is payable if S.Tax, interest & 15% penalty is paid 30 days after notice but within 30 days of recept of Order.

(iii) Beyound that the penalty payable is 100% of S.Tax involved.