Amendment in Section 78

[Admin TMI]

Question - What are proposed amendment in Section 78 in Finance Bill 2015 ?

[Admin TMI]

Section 78 is being amended to rationalize penalty, in cases involving fraud or collusion or wilful mis-statement or suppression of facts or contravention of any provision of the Act or rules with the intent to evade payment of service tax, in the following manner,-

(i) penalty shall be hundred per cent of service tax amount involved in such cases;

(ii) penalty equal to 15% of the service tax amount is to be paid if service tax, interest and reduced penalty is paid within 30 days of service of notice in this regard;

(iii) a reduced penalty equal to 25% of the service tax amount determined by the Central Excise Officer, by an order, is to be paid if the service tax, interest and reduced penalty is paid within 30 days of such order; and

(iv) if the service tax amount gets reduced in any appellate proceeding, then penalty amount shall also stand modified accordingly, and benefit of reduced penalty (25%) shall be admissible if service tax, interest and reduced penalty is paid within 30 days of such appellate order.

AI Summary

Finance Bill 2015: Amendments to Section 78 Adjust Penalties for Service Tax Evasion, Offering Reductions for Prompt Payment. Section 78 of the Finance Bill 2015 is being amended to adjust penalties related to service tax evasion cases involving fraud, collusion, or misrepresentation. The amendments propose a 100% penalty of the service tax amount in such cases. However, if the service tax, interest, and a 15% reduced penalty are paid within 30 days of notice, the penalty is reduced. A further reduction to 25% is available if payment is made within 30 days of the Central Excise Officer's order. If the service tax amount is reduced in appellate proceedings, the penalty will be adjusted, maintaining the 25% reduction benefit if paid within 30 days.