Service Tax Penalty

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Mukesh Katara (Querist)
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01 May 2010
Dear all member

can u please give me advise regarding we have all ready interest pay(section 68) on delay payment of service tax. so why we have pay penalty(section 76 finance act)..example below

We fails to pay service tax of Rs. 20,00,000/-. Due Date of payment was 5th January. Actual Payment is made on 20th January. What would be the amount of Penalty u/s 76? Solution : The default has continued for 15 days. 2% of the Service Tax for days for which default is continued = 2% x 20,00,000 x 15/31= Rs. 19,355/- (A) Penalty calculated @ Rs. 200 per day for 15 days =Rs. 3,000/- (B) Penalty to be paid : (A) or (B) whichever is higher, i.e. Rs. 19,355/.and interest is 2000000*15d*12%/365=9863 this will be also paid...

please replay as early as possible

CMA Chandan Singh

CMA Chandan Singh (Expert)
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01 May 2010 Circular No. 97 / 8 /2007
New Delhi, the 23rd August, 2007

Delay in payment of service tax, including a part thereof, attracts simple interest in terms of section 75 of the Act. The rate of interest is as prescribed from time to time, in accordance with this section. At present, the rate of interest is 13% per annum (notification No. 26/2004-ST, dated 10.9.2004). Further, failure to pay service tax also attracts a penalty under Section 76 of the Act, which shall not be less than Rs 200 for every day during which such failure continues or at the rate of 2% of such tax per month, which ever is higher, starting with the first day after the due date till the date of actual payment of the outstanding amount of service tax. However, such penalty would not exceed the service tax payable.

CMA Chandan Singh

CMA Chandan Singh (Expert)
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Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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01 May 2010 Interest is 13 % per annum to be calculated for the number of days delay as per section 75 read along with rule 7 C of the Service tax Rules,1994. Interest shall be payable for the loss of revenue.

Penalty is specified in section 76 and it is for the contravention of the rules.

Therefore delay attracts the provisions of both sections.

Mukesh Katara

Mukesh Katara (Querist)
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01 May 2010 thanx sir

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