SECTION73 (3) of Finance Act, 1994, provides for non-serving of notice under Section 73(1) by department in such cases where service tax has been paid before issuance of notice. However, there is no clarity whether department can still initiate proceedings for imposing penalty under Section 76 or 78. Though, CBEC clarified sometime back that all such cases where tax has been paid before issuance of notice can be closed without imposing penalty, it is found that audit objections are still being raised for non-imposition of penalty.  Several cases of such nature are pending in the department.  Now, a clear cut amendment has been made under Section 73 by inserting an explanation under Section 73(3) providing for non-imposition of penalty under any of the provisions of Finance Act or Rules, if payment of service tax is made under Section 73(3) . A well conceived and timely amendment which will bring relief to agitated assessees and worried officers.

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