Tax FAQ

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Penalties in Service Tax

There are different penalties under service tax for late filing of return or penalty for failure to pay service tax or Penalty for default in obtaining service tax registration certificate and payment of service tax. Finance minister in budget of 2013 has said that out of nearly 17 lakhs registered assesses under Service Tax only 7 lakhs file returns regularly. Need to motivate them to file returns and pay tax dues. A onetime scheme called ‘Voluntary Compliance Encouragement Scheme’ proposed to be introduced. Defaulter may avail of the scheme on condition that he files truthful declaration of Service Tax dues since 1st October 2007. Read How to do Online Service Tax Registration

Section

Nature of default

Amount for Penalty

70

Fees for late filling of Return.

Delay upto 15 days from the due date

Delay of more than 15 days and upto 30 days from the due date

Delay of more than 30 days from the due date

Rs. 500

Rs. 1000

Rs. 1000 + Rs. 100 per day from 31st day maximum Rs.20000 w.e.f. 01.04.2011 prior to that Rs. 2000/-

76

Failure to pay service tax

15 of the tax per month or Rs.100 per day limited to 50% of tax

77

Penalty for default in obtaining service tax registration certificate and payment of service tax

Upto Rs. 10000 or Rs.200 per day till failure, whichever is higher

77

Assessee fails to:

  1. Furnish information called by an officer; or
  2. Produce documents called for by a Central Excise Officer; or
  3. Appear before the central Excise Officer, when issued with a summon for appearance to give evidence or to produce a document in an enquiry

Upto Rs. 10000 or Rs.200 per day till failure, whichever is higher

77

Failure to keep, maintain or retain books of accounts and other document required

Upto Rs. 10000

77

Assessee fails to pay service tax electronically

Upto Rs. 10000

77

Assessee issues invoice in accordance with provisions of the Act or rules made thereunder, with incorrect or incomplete details or fails to account for an invoice in his books of accounts

Upto Rs. 10000

77

Penalty for contravention of any provision for which no penalty is provided

Not exceeding Rs. 10000

78

Penalty for suppressing value of taxable

50% of tax amount

(If records captured are true**)

100% of tax amount

(if not recorded in books^)

*Totally mitigated if tax and interest paid before issue of notice – Sec.73 (3)

**Mitigation (a) 1% per month; maximum upto 25% if all dues paid before notice: sec 73(4A)

(b) 25% of tax if all dues paid within 30 days of issuance of notice (90 days for service provider whose taxable service does not exceed 60 Lakh rupees during any of year covered by notice or during last preceding financial years) – Proviso to section 78

No mitigation

Over and above the penalties, department has now the power of prosecution also.

If penalty payable under section 78, the provision of section 76 shall not apply.

Note: if service tax NIL, penalty may be reduced/waived – Rule7C

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2 thoughts on “Penalties in Service Tax
  • RPSINGH says:

    insertion of section 78A of service tax Act states what?

  • maheswar sahoo says:

    sir
    this is to inform you that company having service tax no AACCM1339DST001 HAS COLLECT S,TA FROM bigbazar patia &nikhil associate patia bhubaneswar of Rs 19 lakh & 7 lakh respectively but not deposited till date, you are request to collect information from above party7 DO THE NEEDFULL. PLEASE KEEPIT SECRET
    THANKING YOU