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Interest an dpenalty on service tax

Sai charan (Article Assistant) (72 Points)

27 July 2016

our client has received transport services from a GTA and is liable to pay ST on Reverse charge mechanism with an abatement of 70%..but he failed to pay the ST ...Now whether he has to pay the amount together with interest and penalty if applicable...if yes plz provide relevant rule or notification

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CMA Poornima Madhava (CMA) (13097 Points)
Replied 27 July 2016

Refer section 76 of Finance Act. You need to pay ST and interest. No penalty if ST and interest are paid before issue of SCN or paid within 30 days of service of SCN. If no SCN is issued, then no need to pay penalty.

Sai charan (Article Assistant) (72 Points)
Replied 27 July 2016

thanx mam..mam do u mean showcause notice...in this case no such notice has been issued to our client..if he has to pay pls provide the applicable rates...his service TO < 60lakhs

CMA Poornima Madhava (CMA) (13097 Points)
Replied 27 July 2016

If no show cause notice is issued, then no need to pay penalty. Rate of interest on ST would be as applicable for Others category @ 12% pa (i.e. 15% - 3%) since turnover is <60 lacs.

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Sai charan (Article Assistant) (72 Points)
Replied 27 July 2016

mam in this case our client is service recipient naa...so do we need to take his turnover into consideration or the turnover of the service provider...and one more doubt is i think actual rate of interest is 18% and if he is eligible for concession of 3%,,then he should pay 15% naa...if the delay in pament exceeded 12 months then alsso were the interest %s remains same??

CMA Poornima Madhava (CMA) (13097 Points)
Replied 27 July 2016

You need to consider the turnover of the person paying tax [i.e. service recipient in this case]
Sec 75 has been amended vide Finance Act 2016. What you have mentioned is old provision and what I have said is amended provision. Refer for details: https://goo.gl/4cTzCz