Demand notice under Section 75 & 76

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

21 April 2010 Dear Sir,
I am confused regarding the Interest payment calculation. Please help me on the issue
Notice/Order

" I hereby confirm the demand of service tax of Rs. 20000/- and interest applicable thereon from the date it is due till the date of payment , at the prescribed rate under section 75 of the finance Act 1994.
I also impose penalty of Rs. 20000/- on the assessee under section 76 of the act ,ibid."

This order received againest SCN in 2004 for short payment of service tax.

So now what i have to pay ....

Regards

SANJAY JAIN

SANJAY JAIN (Expert)
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21 April 2010
The Section 75 requires paying interest on the service tax amount. This penalize clause is invoked in case whereas Assessee fails in paying service tax amount or short paid by the due date. Presently the rate of interest is fixed 13%.

As the facts speak themselves that demand has been confirmed on the Show cause notice issued in 2004. Means this show cause notice was issued for non payment of the service tax amount some around in 2003/2004. So interest calculation would start from 5th of the next month for which month this amount should have been deposited.

Regarding the penalty u/s 76, the higher of the following is payable:
(i) Rs. 200/- per day for each day of non payment of service tax or
(ii) 2% per month of tax amount.

Though the maximum penalty amount can not exceed service tax amount. So where the demand is confirmed for Rs.20000/-, the penalty amount can not exceed Rs. 20,000/-
For further query, feel free to write sanjayinfbd@yahoo.com (M-09350048731) or visit, HNO. 2489/8,Faridabad(Haryana).