Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

Interest & penalty

Suman Kumar Agrawal (Chartered Accountants) (226 Points)

11 September 2014

My Client deposited service tax under construction of Residential Flats & Building of Housing Board.At the time of Audit service tax department detected & Instruct to deposit balance of service Tax under works Contract.Their department memo instruct us to deposit difference amount & interest on it. My Client already deposit difference amount but interest not deposited by him.Service Tax Range issued a letter & instruct to deposit Interest & Penalty @ 1%. But the Audit officer not mentioned about penalty.Is it necessary to deposit Penalty also? & vide which section penalty shall be imposed by the department ,when the Audit office not mentioned in his memo.

Reply
Follow
Share

1 Replies

JSS (Practice) (58 Points)
Replied 21 September 2014

Dear Mr. Suman,

Please refer to the below provision - Sec 73 (4A) of the Finance Act and revert in case of any clarification.

Sec. 73 - Recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded

(4A) Notwithstanding anything contained in 43[sub-section (4)], where during the course of any audit, investigation or verification, it is found that any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, but the true and complete details of transactions are available in the specified records, the person chargeable to service tax or to whom erroneous refund has been made, may pay the service tax in full or in part, as he may accept to be the amount of tax chargeable or erroneously refunded along with interest payable thereon under section 75 and penalty equal to one per cent of such tax, for each month, for the period during which the default continues, up to a maximum of twenty-five per cent of the tax amount, before service of notice on him and inform the Central Excise Officer of such payment in writing, who, on receipt of such information, shall not serve any notice under sub-section (1) in respect of the amount so paid and proceedings in respect of the said amount of service tax shall be deemed to have been concluded:

Provided that the Central Excise Officer may determine the amount of service tax, if any, due from such person, which in his opinion remains to be paid by such person and shall proceed to recover such amount in the manner specified in sub-section (1).

Explanation.—For the purposes of this sub-section and section 78, "specified records" means records including computerised data as are required to be maintained by an assessee in accordance with any law for the time being in force or where there is no such requirement, the invoices recorded by the assessee in the books of account shall be considered as the specified records.]