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Service Tax Penalty

Bijoy (Working ) (127 Points)

11 March 2011

Hi Guys,

Kindly tell me that how to pay service tax penalty (For late filing of return). step by step.

Thanks in advance.

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8 Replies

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 21 March 2011

1) calculate your penalty / interest

2) pay the same by GAR-7

3) file the return online

4) submit a copy to R/O , get stamped copy

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soni chauhan (Service) (670 Points)
Replied 23 March 2011

Budget 2011 - Service Tax - Compliance Mechanism:

February 28, 2011

4.1 The existing scheme relating to compliance has been proposed for a revamp with a view to strike a healthy balance between the interests of revenue and legitimate business and to promote voluntary compliance.

4.2 As a result a number of changes have been proposed with the following philosophy:

(i) Improve voluntary compliance by encouraging self-correction, wherever the deviations are unintentional omissions;

(ii) Reduced penalties may be imposed if the transactions are captured fully and truthfully in records and further abated if timely admission and payment is made;

(iii)Intentional and unrecorded violations should be dealt with severely with no concession whatsoever.

4.3 Thus the undue advantage obtained by carrying on surreptious activities at the cost of law-abiding business is sought to be neutralized. The revised system also encourages informed decision-making by the taxpayers at the early stages of investigation or verification by the Department. Changes proposed in the compliance mechanism are given in the following paragraphs.

4.4 The maximum penalty for delay in filing of return under section 70 is proposed to be increased from Rs.2,000/- to Rs.20,000/-. However, the existing rate of penalty is being retained under rule 7C of the Service Tax Rules, 1994. The maximum penalty is presently reached after a delay of 40 days. The new limit will impact only those who delay filing of return for longer durations.

4.5 The provisions of section 73 (1A) and both the Provisos of section 73 (2) are proposed for deletion. As a result, the benefit of reduced penalty shall not be available in cases of fraud, mis-statement, suppression, collusion etc. in the ordinary course. However, revised benefit will be available under the new sub-section 4A of section 73 in situations where the true and complete account of transactions is otherwise available in the specified records and the assessee during the course of audit, verification or investigation pays the tax dues, together with interest and the reduced penalty. It is clarified that the assessee can also avail this benefit on his own also. The extent of penalty is being further reduced to 1% per month of the tax amount for the duration of default, with an upper ceiling of 25% of the tax amount.

4.6 Interest rate for delayed payment of service tax is being increased to 18% per annum, effective 01.04.2011 (Notification 15/2011-ST). A concession of 3% has been proposed in the Bill for tax-payers whose turnover during any of the years covered in the notice or the preceding financial year is below Rs 60 lakh.

4.7 Penalty for failure to pay tax under section 76 is being halved.

4.8 The maximum penalty under section 77 for contravention of various provisions is proposed to be increased from Rs.5000/- to Rs.10000/-. However, the daily rate of penalty, wherever applicable, is being retained.

4.9 Penalty under Section 78 is being altered from upto twice the amount of tax to an amount equal to the tax. Moreover, in situations where the taxpayer has captured the true and complete information in the specified records, penalty shall be 50% of the tax amount. The latter penalty (only) shall be further reduced to 25% if the tax dues are paid within a period of one month together with interest and reduced penalty. For assessees with turnover upto Rs.60 lakh the period of one month shall be increased to ninety days.

4.10 Section 80 is being amended by substituting section 78 with the words “proviso to section 78” and thus the power to waive penalty shall be available only in cases where the information is captured properly in the specified records.

4.11 The revised position relating to penalties and their mitigation or waiver is summed up in the following table (portion in italics being the changes):

Situation	Position in records	Penalty & Provision	Mitigation	Complete Waiver
No fraud, suppression etc.	Captured	1% of tax or Rs 100 per day upto 50% of tax amount: Sec 76	Totally mitigated if tax and interest paid before issue of notice: Section 73(3)	On showing reasonable cause under section 80
Cases of fraud, suppression etc.	Captured true & complete position in records	50% of tax amount: Proviso to Section 78	(a) 1% per month; max of 25% if all dues paid before notice: Sec 73(4A); (b) 25% of tax if all dues paid within 30 days (90 days for small assesses): Provisos to Section 78	-do-
	Not so captured	Equal amount: Section 78	No mitigation at all	Not possible

4.12 Power to issue search warrant under section 82 is proposed at the level of Joint Commissioner and the execution of search warrant at the level of Superintendent.

4.13 Provisions relating to prosecution are proposed to be re-introduced and shall apply in the following situations:

(i) Provision of service without issue of invoice;

(ii) Availment and utilization of Cenvat credit without actual receipt of inputs or input services;

(iii) Maintaining false books of accounts or failure to supply any information or submitting false information;

(iv) Non-payment of amount collected as service tax for a period of more than six months.

4.14 There shall be no power of arrest and the prosecution can be launched only with the approval of Chief Commissioner.

Boopathi.v (Sr.Finance Executive ) (29 Points)
Replied 26 March 2011

soni chauhan Thank you Very much for you information Regards Boopathi.V Chennai

manoj kumar (cs) (130 Points)
Replied 27 April 2011

thanks Mr. Sharma,

But pls let me know wat to wright in Accounting Code of the Service as this is not a payment of service tax but for penalty.

manoj kumar

company secretary

88009 11319

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 27 April 2011

https://www.cenexcisekochi.gov.in/gar7st-challanreverse.pdf

1st code is for service, 2nd is for interest/penalty

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Durga prasad Ambati (Taxation, Pursuing CA) (737 Points)
Replied 27 April 2011

Originally posted by : U S Sharma
	https://www.cenexcisekochi.gov.in/gar7st-challanreverse.pdf 1st code is for service, 2nd is for interest/penalty

Thank u sir. for u r helping nature

manoj kumar (cs) (130 Points)
Replied 27 April 2011

thanx sir,

one more thing i read your reply in one of the service tax return question (attached). u said that the assessee who are not liable to pay tax need not to file service tax return, if you have any recent notification/circular etc. on it as we are about to surrender the service tax regn. number, will the AO ask for the belated return, though we have filed the Service tax return for march but not for april-sep return.

do we really need to file service tax return for April to sep, neither the firms has doen any business nor they have bank account?

pls advice.

Attached File : 5 penalty on nil retun filing in delay service tax forum chartered accountants india taxpayers cas india ca india icai company secretary cs cost accountants mba finance professionals.pdf downloaded: 335 times

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 27 April 2011

@ Manoj

by virtue of circular no 137/58/2007-CX.4 dated 29/03/2007, department has been instructed to drop the departmental proceedings and drop show cause notice for assesee who have NIL tax liability and did not filed return or filed return late.

it was the part of a discussion, circular was laid to department, but it does not mean that department will get automatic that every servicetax assessee who did not submitted return has tax liability as NIL ..........

in such situation the asseseee has to file nil return ( even belated) , department can not impose any penalty for NIL return.

if anybody is opting to surrender the service tax number, then he can file NIL return upto date or submit a letter to R/O that his service for the non return periods were below taxable limit ( with figures to satisfy the needs of service tax act), hence they did not submitted nil return, and request them to accept the surrender of R/C.

govt has issued the above circular to save the small service providers from the undue harassment of indirect tax official proceedings, which are bouncer to small service providers. govt did not allowed anybody to break the rules, in rules there are clear that service tax holder has to submit the half yearly return, even in case of NIL

you can see the highligted part is the absract of notification , and balance is discussion part, where the fact has been put that if govt has allowed so much , then why not they exempt the small service provider from filing mreturn even ........

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