Penalty for ST3 Return

[Raja krishnan]

Sir,

A export unit belatedly filed their ST3 during the period of 2013-2014 and after that they have paid applicable interest for the delay days...now department insist to applicable penalty. Whether it is correct...Please clarify

[Ganeshan Kalyani]

Sir, Section 70(1) of Finance Act, 1994, as amended w.e.f. 08.04.2011 provides that in cases where returns are filed after due date, late fees not exceeding ₹ 20,000/- is payable for delayed filing of return, as may be prescribed.

If return of Service Tax is not filed within prescribed period, penalty is leviable u/s 77(2) which can be up to ₹ 10000/-. If late fee is paid, penalty will not be imposed.

The above provision will clear your doubt, I hope. Thanks.

[KASTURI SETHI]

Late fee and penalty both are separate in Service Tax. Normally, the department closes the chapter after deposit of late fee for delay in filing ST-3 return. On the other hand at the same time, the doors of Section 77 (2) are open. Late fee and penalty are totally different in the eyes of law.

[Ganeshan Kalyani]

Yes Sir I agree with you. Thanks.

[Rajagopalan Ranganathan]

Sir,

According to proviso 2 of rule 7C of Service Tax Rules, 2004 " where the assessee has paid the amount as prescribed under this rule for delayed submission of return, the proceedings, if any, in respect of such delayed submission of return shall be deemed to be concluded". Therefore if you have paid late fee leviable for delayed filing of return then you are liable to pay any penalty.

[KASTURI SETHI]

Sh.Raja Krishnan Ji,

The term, "deemed to be" means supposed to be, considered to be, thought to be etc. but which is not in reality. In other words,"the element of discretion" is included.

Late fee is not penalty and vice versa. Late fee is for late submission of any form, return etc. whereas penalty is imposed for contravention of the provision of Rule/Section of an Act.Both have different purposes. Moreover, Rule cannot override Section of an Act.

In Central Excise both terms have been explained separately and separate provisions are for both.

AI Summary

Export Unit Faces Penalty for Late ST3 Return Despite Paying Interest; Section 70(1) Late Fee Already Settled An export unit filed their ST3 return late for the 2013-2014 period and paid the applicable interest. The department is now insisting on a penalty. Respondents clarified that under Section 70(1) of the Finance Act, 1994, a late fee up to 20,000 is applicable for delayed filings, while a penalty up to 10,000 under Section 77(2) may also apply. However, if the late fee is paid, the penalty is typically not imposed. The distinction between late fees and penalties was emphasized, noting that paying the late fee usually concludes proceedings related to delayed submissions.