Duty on unpaid service tax

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 July 2012 Sir,
we have got foreign services towards commissioning of our imported machinery in the year 2009 and on the payment made to the commissioning company we have not paid the Service tax.
if we have to pay the service tax on that amount now what will be the procedure. @ what rate the service tax is to calculate 10% or 12%

RENGARAJ R.K

RENGARAJ R.K (Expert)
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20 July 2012 "on the payment made to the commissioning company" means, who is the service provider? Are you paying any amount to other commissioning company?

As per the point of taxation rules as amended from 01.04.2012, it is based on dt of raising of the invoice, date of receipt of the payment or advance received. Only based on your reply we can answer.

RAMESH JOSHI

RAMESH JOSHI (Expert)
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20 July 2012
whether the commissioning company is Indian or Foreign ? When commissioning is done ? Now or in 2009 ? If commissioning was done in 2009 then you are required to pay service tax @10.3%. If it is now then as per the Point of Taxation Rules.

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Querist : Anonymous

Querist : Anonymous (Querist)

25 July 2012 Sir, we are the service receiver, since the company is foreign company and dont have any branch in India, we are liable to pay the service tax, payment towards the services made to the company in the year 2009.

Querist : Anonymous

Querist : Anonymous (Querist)

25 July 2012 we are indian company and the commissioning company is foreign company, and commissioning done in 2009 and payment also made in the year 2009

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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21 July 2024 If you have received foreign services for commissioning of imported machinery in 2009 and have not paid the service tax on the payment made to the foreign commissioning company, here’s the procedure you should follow:

1. **Determine Applicable Rate:**
- The rate of service tax applicable would depend on the category of service under which the commissioning services fall. In 2009, the standard rate of service tax was 10%. However, certain specific services were taxed at a higher rate of 12%. You need to ascertain under which category the commissioning services would be classified.

2. **Calculate Service Tax Liability:**
- Calculate the service tax liability based on the total payment made to the foreign commissioning company in 2009. If the services are taxable at the rate of 10% or 12%, apply the respective rate to the payment amount.

3. **Interest and Penalty:**
- Since the service tax payment is being made after the due date (from 2009), interest will be applicable on the delayed payment. The interest rate is determined by the government and may change periodically. You should calculate interest from the due date till the actual date of payment.
- There might also be a penalty for non-payment or delayed payment of service tax. The penalty could be up to 100% of the amount of service tax due, depending on the circumstances of the case. It is advisable to consult with a tax professional to determine the exact penalty implications.

4. **Payment and Documentation:**
- Prepare a calculation of the service tax amount, including interest and penalties (if applicable).
- Pay the calculated service tax amount along with interest through the online portal of the Central Board of Indirect Taxes and Customs (CBIC) or any authorized bank.
- After payment, generate a challan or proof of payment, which should be retained for record-keeping and future reference.

5. **Disclosure and Compliance:**
- File a revised service tax return for the relevant period to disclose the payment of service tax along with interest and any applicable penalty.
- Ensure all necessary documentation related to the commissioning services and payment to the foreign company is available for audit purposes.

6. **Consultation:**
- It is recommended to seek advice from a tax consultant or chartered accountant experienced in handling service tax matters to ensure compliance with current regulations and to calculate the exact amount of service tax, interest, and penalties correctly.

By following these steps, you can regularize the payment of service tax on the commissioning services received from the foreign company in 2009 and ensure compliance with Indian tax laws.