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Issues:
1. Confirmation of penalty under Sec. 78 of the Finance Act, 1994 for evasion of Service tax. 2. Applicability of penalty even if the differential Service tax along with interest has been paid before the issuance of show cause notice. Analysis: 1. The case involved a stay petition filed by M/s. B.S. Enterprises against an order confirming a penalty of Rs. 28,56,336/- under Sec. 78 of the Finance Act, 1994 for evasion of Service tax related to manpower supply services. The applicants were found to have evaded payment by not filing proper returns, leading to the issuance of a show cause notice. The adjudicating authority confirmed the demand of Service tax along with interest and imposed the penalty. The applicants argued that since the differential Service tax along with interest was deposited before the show cause notice, penalty should not be imposed. 2. The Jt. CDR referred to a Civil Appeal where the Hon'ble Supreme Court upheld the imposition of penalty even if the duty liability was discharged before the show cause notice was issued. The Tribunal noted the intentional evasion of Service tax by the applicants and rejected the application for waiver of pre-deposit of the penalty amount. The Tribunal directed the applicants to deposit the entire penalty amount imposed by the adjudicating authority, ultimately rejecting the stay application. This judgment highlights the importance of timely compliance with tax obligations and the consequences of intentional evasion. It establishes that the payment of differential tax and interest before the issuance of a show cause notice does not absolve a party from the liability to pay the penalty. The decision underscores the need for taxpayers to adhere to proper filing procedures and fulfill their tax obligations promptly to avoid penalties and legal repercussions.
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