penalty under service tax

[satbir singhwahi]

Audit party has detected service tax on Rent of immovable property . Service tax and interest at the rate of 15 p.a. has been deposited . Whether penalty will need to be deposited.

[YAGAY andSUN]

Dear Satbir,

In the Finance Budget 2012 there was a notification which stated that if service tax on renting of immovable property was deposited within six months (if not paid earlier due to pendency of this matter in various courts of India), then, no interest and penalty would be levied.

Further, ACES was in force.  You would had seek the benefit of such Schemes to avoid any interest and penalty.

But in your case, the Audit Party has deducted this non payment of Service Tax on Renting of Immovable Property. Therefore, in our opinion Department may impose penalty on your organization.  However, you may avail the benefit of Section 80 of the Finance Act, 1994 for not imposing the penalty on your organization.

Regards

Team YAGAY & SUN

(Management & Indirect Tax Consultants)

 

[R Ashok]

dear satbir,

There may be genuine cases, where the assessee may not be knowing his service tax liability; ( let us assume & proceed on this assumption ) Then in such cases, the assessee may use the provisions contained in Section 73(3), to avoid levy of penalty. To avail this benefit, the assessee should pay both service tax and interest before the serving the show cause notice. Then the assessee should intimate the details of payment to the central excise officer . ( pl refer Sen brothers Vs. Commissioner of central excise, Bolpur - 2014 (33) S.T.R. 704 ( TRI - KOLKATA )= 2013 (12) TMI 433 - CESTAT KOLKATA

Ashok

​Chartered accountant, coimbatore

AI Summary

Unpaid Service Tax on Rented Property: Penalty Avoidable via Section 80 or Section 73(3) of Finance Act, 1994? An audit revealed unpaid service tax on rented immovable property, which was subsequently paid along with 15% interest. The query concerns whether a penalty is also required. One respondent noted that a 2012 notification allowed for no penalty if the tax was paid within six months due to court pendency, but since the audit detected the non-payment, a penalty might still be imposed unless Section 80 of the Finance Act, 1994 is invoked. Another respondent suggested using Section 73(3) provisions to avoid penalties by paying the tax and interest before a show cause notice is issued.