My query is based on Proviso to Section 75 of finance Act, 1994 as amended w.r.t. interest on delayed payment of service tax. The said section and proviso thereto is reproduced below:
75. Interest on delayed payment of Service Tax –
Every person, liable to pay the tax in accordance with the provisions of section 68 or rules made there under, who fails to credit the tax or any part thereof to the account of the Central Government within the period prescribed, shall pay simple interest [at such rate not below ten per cent and not exceeding thirtysix per cent per annum as is for the time being fixed by the Central Government, by Notification in the Official Gazette] for the period] by which such crediting of the tax or any part thereof is delayed.]
Provided that in the case of a service provider, whose value of taxable services provided in a financial year does not exceed sixty lakh rupees during any of the financial years covered by the notice or during the last preceding financial year, as the case may be, such rate of interest, shall be reduced by three per cent. per annum
As per the proviso, rate of interest shall be reduced by 3% p.a. from the rate of interest notified u/s 75. The notified rate of interest is 18% p.a. w.e.f. 01/04/2011 and thus the beneficial rate of interest is 15% p.a.
The benefit of reduction is available to a service provider whose taxable service in a finacial year does not exceed Rs 60 lakh during any of the financial years covered in the notice or during the last preceding financial year, as the case may be.
Now, the query is-
What does the “last preceding financial year” mean? Whether it is the financial year preceding the date on which the payment is made or the financial year preceding to the date to which the liabiltiy relates for eg if a person pays the tax related to the F.Y. 2011 - 12 in the year 2014 - 15 in this case the last preceding financial year is F.Y. 2010-11 or F.Y. 2013-14