Delay in Service Tax payement and return filing

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One of my friend got himself regisered under service tax in Dec., 2006. Thereafter he neither paid any service tax nor filed any return due to some unavoidable reasons. Now he wish to pay the liablity and file the returns. His Service Tax liablity is apprx. Rs. 1 Lac. However the interest and penalty part is too much. Penalty for delayed payment  is same as amount of service tax liablity. Could anyone has a better advice. Further, is there any date bar in case of service tax returns?

Replies (1)

Hi,

In connection with the case mentioned above, following points may be of use in my opinion -

1. As mentioned by you, liability since December 2006 is Rs. 1 Lacs, which suggests that the Value of taxable service by reverse calculation is about Rs. 10 Lacs only.

2. If it is so and if he has not charged service tax, it is likely that after ascertaining the value of taxable service per year, he may be subjected to small service providers exemption for a particular / all year(s). and in such case he need not pay tax. Further he may take benefit of Circular No. 97/8/2007 for not filing of return as well to avoid penalty (Refer para 6.1)  https://www.servicetax.gov.in/circular/st-circular07/st_circ_97-2k7.htm

3. But, inspite of having turnover less than prescribed limit, if he has chraged & collected service tax from the customers, then service tax must be paid immediately along with the interest for which no concession shall be granted.

4. However, penalty for failure to pay service tax u/s 76 can be waived u/s 80 on proving "reasonable cause" for such failure.


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