Benefits of proviso to sec 75-service tax

Mr Sujit

Interest is applicable @ 18% only as 60 L is crossed during 2012-13 itself and which would covered by the notice, if any. The benefit of reduced rate is not applicable even though there is NIL turnover in preceeding FY. The benefit is intended exclusively for small service providers.

 

Thanks for the reply. As per your reply, what I infer is that if current Year's turnover is more than 60 lakh, benefit of reduced rate of interest is not available (though in the preceding FY turnover was less than Rs 60 lakh); since this period (current year 2012-13) may be covered in the notice later on. Am I right? Please clarify. Regards Sujit Talukder

In my opinion, the reduced interest rate of 15% is available to the service provider, even if his turnover exeeds Rs. 60 Lacs in the current FY, but was less than 60 Lacs in the preceding FY, if he pays interest suo moto and before receiving any notice. But if the payment is made after receiving a notice from the departement, the reduced rate is applicable only if turnover is below 60 Lacs in ALL of the FY covered in the notice.

The phrase used in the proviso is "as the case may be"

There are 2 case: - i) Notice not received; and ii) Notice received

In Case i) Check turnover in preceding FY, if < 60 Lacs, 15% interest, otherwise 18%

Case ii) Check turnover in all the FY's covered in the notice, if > 60 Lacs in any FY, 18% Int. otherwise 15%

Regards,

Manoj Agarwal (tax2001-it @ yahoo.com) 

One different Issue:

Upon plain reading of the proviso to Sec. 75, it is clear and unambigiious that the benefit of reduced interest rate of 15% is only available to service providers and not to the service receipients.

Is my understanding correct? This doesn't seem logical?

Thank you Mr Manoj, for the clarification. I was also thinking of Sec 73(3) and the benefit of reduced rate of interest will be available if tax and interest is paid before issue of SCN. since, once tax and int. is paid before SCN, the question of covering the current year period in the notice will not arise by virtue of Sec 73(3). But, one caution is there if current FY's turnover is more than 60 lac that if there is a dispute on some other issue for which ultimately department issue notice/SCN, the this benefit will forego and the assessee has tp pay @ 18% instead of 15%. Am I right? Regards Sujit Talukder

Dear Mr. Sujit, 

I thank you for appriciating my views. Now, if there is a dispute on some other issue for which ultimately department issue SCN, then this case will fall under case (ii) as above i.e. Notice received. The benefit of reduced rate of interest @ 15% is available only if the value of taxable services in ALL the FY's (including Current Year) covered in the notice is below Rs. 60 Lacs. So if Current Year's taxable services exceeds Rs. 60 Lacs, Pay interest @ 18%. 

Now suppose at the time of payment of interest, say on 13-01-2013, the condition is satisfied and interest paid @ 15%. But the total taxable services for Current FY 2012-13 (obviously, which will be known after 31-31-13) exceeds Rs. 60 Lacs. In such a case, my opinion is that the assessee must pay additional interest   @ 3%.

Again suppose, after paying interest as above on 13-01-2013 and say in March 2013, when the total taxable turnover has already exceeds Rs. 60 Lacs, the assesse finds that some service tax on some other dispute, not covered in the SCN recd. as above, is due for more than say 3 years, and suo moto he pays the same, he can avail the benefit of 3% reduced rate of interest provided that his turnover was below Rs. 60 Lacs ONLY during FY 2011-12. The Current Year's turnover is not relevant.

Thanks & Regards,

Manoj Agarwal - +91-9937041788

Rourkela

Note: If EXPERTS have contrary views, Kindly Share. (Knowledge Shared is Knowledge Gained)

Thank you for clarification.

Regards

Sujit Talukder

In case assessee has income less than 60 lakhs during financial year and he has not deposited the service tax collected from the client, what would be the rate of interest - 12% or 24%.

Regards,

Ishan

Thanks for the query Sujit,
In case of a notice is issued than the higher rate of 18% will apply to that portion of demand which is demanded and not have already been paid,
say in above case the actual turnover in the year was Rs. 150lacs but disclosed was 120 lacs only on which tax was also paid including that 90 lacs on which Intt. was paid,
now if notice is for that 120lacs which is actually been paid than assessee is only required to place his returns and challans including details thereof and the demand will be dropped and actually SCN will be dropped without raising any demand,
now if SCN/demand is for that undisclosed amount of 30 lacs than the rate of interest will be 18% on that part only, it should not be construed that such higher rate shall be also included for since that monies of taxable services on which tax was already paid can not be included in the notice and hence on such 90 lacs 15% rate shall be taken.

I hope this view could be appreciated,
please revert in case of issue,

Thanks,
Abhimanyu