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What is penalty or interest payable 4 not paying service tax

Francis (Finance Professional) (41 Points)

22 May 2014

Hi All,

I am a director of private limited company, and have not filed service tax returns for the last 4 years.

Please let me know the penalty or interest that I have to pay for defaulting in filing returns?

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Vikas (CA) (1135 Points)
Replied 26 May 2014

Dear Francis,

Section 78A of the Finance Act, 1994, prescribes for the following -

"SECTION 78A. Where a company has committed any of the following contraventions, namely:—

(a) evasion of service tax; or

(b) issuance of invoice, bill or, as the case may be, a challan without provision of taxable service in violation of the rules made under the provisions of this Chapter; or

(c) availment and utilisation of credit of taxes or duty without actual receipt of taxable service or excisable goods either fully or partially in violation of the rules made under the provisions of this Chapter; or

(d) failure to pay any amount collected as service tax to the credit of the Central Government beyond a period of six months from the date on which such payment becomes due,

then any director, manager, secretary or other officer of such company, who at the time of such contravention was in charge of, and was responsible to, the company for the conduct of business of such company and was knowingly concerned with such contravention, shall be liable to a penalty which may extend to one lakh rupees."

Therefore, non-filing of service tax return may be considered as suppression of facts from the department for evasion of payment of taxes, and penalty may be imposed.