Un-registered service provider -nonpayment of service tax
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
14 May 2016
Dear Sir(s), My query is that in FY 2013-14, the turnover on invoice basis as also on cash basis exceeded 10 lakhs but I have not paid service tax on amount in excess of 10 lakhs on account of my not being registered with the Deptt which was got done on 1st April 2014. In no FY either preceding to FY 2013-14 or subsequent to this FY 2013-14 amount of services provided has exceeded 10 lakhs on any basis. What penalty and interest I am liable to pay for this lapse and whether this omission has any consequences on the years succeeding FY 2013-14 also or not. Is not there any provision under which some concession is available to one who has unwittingly not registered himself and thus not paid service tax for the year in question. Shall be greatly obliged to know of factual matter.
15 May 2016
I am eagerly waiting for an expert advice.
15 May 2016
in continuation to my query as above, I also request for a clarification in the matter of determination of turnover amount of RS 10 lakhs, which is explained here under.
A clarification in the matter of determination of turnover of RS 10 lakhs is requested. Supposing the gross amount of invoices include amounts incurred towards travelling, lodging, boarding, taxi charges then whether amounts towards such items need to be excluded from the gross amount of invoices to arrive at the amount of taxable services.
02 August 2025
Here’s a detailed explanation addressing your query about **un-registered service provider, non-payment of service tax for FY 2013-14, penalties, interest, and turnover determination**:
---
### 1. **Liability for Non-Payment of Service Tax (FY 2013-14) when Registration was Not Done**
* **Threshold for Registration:**
Service tax registration is mandatory if your aggregate turnover of taxable services exceeds **Rs. 10 lakhs** in a financial year (FY).
* Since your turnover exceeded Rs. 10 lakhs in FY 2013-14 **before registration on 1st April 2014**, you were required to register and pay service tax for that FY.
* **Penalty & Interest:**
* **Interest:** Payable under **Section 75** of the Finance Act, 1994, for late payment of service tax, calculated from due date till payment date.
* **Penalty:** Under **Section 78** (failure to pay service tax), penalty may be levied up to **100%** of the tax amount, but courts/authorities often reduce it if default was unintentional.
* If you voluntarily disclose and pay the due service tax with interest and request waiver/reduction of penalty, it improves chances of concession.
* **No Automatic Concession:**
There is no specific provision that exempts penalty for unintentional non-registration and non-payment, but authorities sometimes grant relief based on bona fide nature and voluntary compliance.
---
### 2. **Impact on Subsequent Years**
* Since you have registered on 1st April 2014 and in subsequent years turnover remained below Rs. 10 lakhs, **no further liability arises for those years**.
* The lapse pertains only to FY 2013-14 and must be addressed for that year.
---
### 3. **Determination of Turnover for Rs. 10 Lakhs Threshold**
* **Gross amount of invoices** is generally taken to calculate turnover.
* However, certain expenses **incidental to provision of service** like **travelling, lodging, boarding, taxi charges** may or may not be includable depending on the facts:
* If these expenses are **reimbursed by the client without markup and separately indicated**, they may be excluded.
* If included as part of the service charge (i.e., part of your gross amount billed), they are includable in turnover.
* It's important to maintain **proper records/invoices** clearly showing reimbursement components.
---
### Summary:
| Aspect | Comment |
| ---------------------------- | ----------------------------------------------------------------------------------------- |
| Liability for FY 2013-14 | Service tax + interest + possible penalty for delay in registration and non-payment |
| Relief/Concession | No automatic waiver, but voluntary compliance helps in penalty mitigation |
| Subsequent Years (post 2014) | No liability if turnover below threshold |
| Turnover calculation | Exclude reimbursed expenses if separately billed without markup, else include in turnover |
---
### Recommendation:
* **File a Voluntary Disclosure** with payment of service tax + interest ASAP.
* Request penalty waiver on grounds of bona fide and inadvertent omission.
* Keep clear breakup of expenses for turnover calculations in future.
---
If you want, I can help draft a voluntary disclosure letter or guide you on calculation of interest & penalty. Would you like that?
---
### 1. **Liability for Non-Payment of Service Tax (FY 2013-14) when Registration was Not Done**
* **Threshold for Registration:**
Service tax registration is mandatory if your aggregate turnover of taxable services exceeds **Rs. 10 lakhs** in a financial year (FY).
* Since your turnover exceeded Rs. 10 lakhs in FY 2013-14 **before registration on 1st April 2014**, you were required to register and pay service tax for that FY.
* **Penalty & Interest:**
* **Interest:** Payable under **Section 75** of the Finance Act, 1994, for late payment of service tax, calculated from due date till payment date.
* **Penalty:** Under **Section 78** (failure to pay service tax), penalty may be levied up to **100%** of the tax amount, but courts/authorities often reduce it if default was unintentional.
* If you voluntarily disclose and pay the due service tax with interest and request waiver/reduction of penalty, it improves chances of concession.
* **No Automatic Concession:**
There is no specific provision that exempts penalty for unintentional non-registration and non-payment, but authorities sometimes grant relief based on bona fide nature and voluntary compliance.
---
### 2. **Impact on Subsequent Years**
* Since you have registered on 1st April 2014 and in subsequent years turnover remained below Rs. 10 lakhs, **no further liability arises for those years**.
* The lapse pertains only to FY 2013-14 and must be addressed for that year.
---
### 3. **Determination of Turnover for Rs. 10 Lakhs Threshold**
* **Gross amount of invoices** is generally taken to calculate turnover.
* However, certain expenses **incidental to provision of service** like **travelling, lodging, boarding, taxi charges** may or may not be includable depending on the facts:
* If these expenses are **reimbursed by the client without markup and separately indicated**, they may be excluded.
* If included as part of the service charge (i.e., part of your gross amount billed), they are includable in turnover.
* It's important to maintain **proper records/invoices** clearly showing reimbursement components.
---
### Summary:
| Aspect | Comment |
| ---------------------------- | ----------------------------------------------------------------------------------------- |
| Liability for FY 2013-14 | Service tax + interest + possible penalty for delay in registration and non-payment |
| Relief/Concession | No automatic waiver, but voluntary compliance helps in penalty mitigation |
| Subsequent Years (post 2014) | No liability if turnover below threshold |
| Turnover calculation | Exclude reimbursed expenses if separately billed without markup, else include in turnover |
---
### Recommendation:
* **File a Voluntary Disclosure** with payment of service tax + interest ASAP.
* Request penalty waiver on grounds of bona fide and inadvertent omission.
* Keep clear breakup of expenses for turnover calculations in future.
---
If you want, I can help draft a voluntary disclosure letter or guide you on calculation of interest & penalty. Would you like that?
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