The Budget 2015 has the intention of the government to align the penal provisions as contained in the Excise and Service tax laws. The penalty section 11AC of the Excise has been substituted and similar changes have been made in the section 76 and 78 of the Finance Act.   Erstwhile section 76 (Penalty for failure to pay service tax) provides: Any person, liable to pay service tax fails to pay such tax, shall pay, in addition to such tax and the interest on that tax, a penalty which shall not be less than

• one hundred rupees for every day during which such failure continues or
• at the rate of one percent of such tax, per month,

whichever is higher, starting with the first day after the due date till the date of actual payment of the outstanding amount of service tax: Provided that the total amount of the penalty payable in terms of this section shall not exceed fifty per cent of service tax payable. Amendment: The amendment in section 76, seeks to simplify the computation of the amount of penalty payable under this section. The substituted section simplifies the computation of penalty under this section and restricts the penalty to 10% of the amount of service tax payable. Not only this, the amended section also seeks to provide additional benefit that no penalty shall be leviable, if service tax and interest is paid within 30 days from the date of service of show cause notice. Note: After this amendment, the assessee can get waiver from penalty imposed under section 76 for non-payment/short-payment of service tax. Thus, there is relaxation in penalty for non-payment/short-payment of service tax provision in Finance Act. Amended Section 76: (1) Where service tax has not been levied or paid, or has been short-levied or short-paid, or erroneously refunded, for any reason, other than the reason of fraud or collusion or willful misstatement or suppression of facts or contravention of any of the provisions- the person who has been served notice under section 73(1) shall, in addition to the service tax and interest specified in the notice, be also liable to pay a penalty not exceeding ten per cent of the amount of such service tax: Provided that where such service tax and interest is paid within a period of thirty days of–

• the date of service of notice under sub-section (1) of section 73, no penalty shall be payable;
• the date of receipt of the order of the Central Excise Officer determining the amount of service tax under sub-section (2) of section 73, the penalty payable shall be twenty-five per cent of the penalty imposed in that order, only if such reduced penalty is also paid within such period.

(2) Where the Commissioner (Appeals), the Appellate Tribunal or, the court, as the case may be, modifies the service tax determined under section 73(2)- the amount of penalty payable thereon, shall also stand modified accordingly, and the benefit of reduced penalty under the proviso to sub-section (1) shall be available if such service tax, interest and reduced penalty so payable, is paid within a period of thirty days from the date of receipt of the order by which such modification is made.” ____________________________________________________________________________________________________