PENATLY FOR LATE FILING OF SERVICE TAX RETURN

[PANKAJ GROVER]

Dear All

As the maximum limit of penalty for late filing of service tax return has been increased from Rs. 2,000 to Rs. 20,000 w.e.f. 1st April 2011, will this penalty will be applicable for the return pertaining to FY 2011-12 or return filed after 1st April 2011 irrespective of the period to which it pertains (i.e FY 0910 or FY 1011).

 

Regards

 

RAPG & Co.

[ROHAN THAKKAR]

Dear Sir,

The penal provisions of late filing of service tax return are contained in Section 70 of the Finance Act and Rule 7C of the Service Tax Rules, 1994 which reads as under:

‘Every person liable to pay the service tax shall himself assess the tax due on the services provided by him and shall furnish to the Superintendent of Central Excise, a return in such form and in such manner and at such frequency and with such late fee not exceeding twenty thousand rupees rupees, for delayed furnishing of return, as may be prescribed.’

In addition, Rule 7C of the Finance Act states the amount to be paid if there is delay in submission of return. The amount to be paid is as under.

Period of delay	Amount to be paid
15 days	Rs. 500
More than 15 days but upto 30 days	Rs. 1,000
More than 30 days	Rs. 1,000 + Rs. 100 for every day till the default continues subject to maximum amount stated in section 70 [i.e., maximum amount to be paid is Rs. 20,000]

 

The maximum penalty of Rs. 20,000 which has been increased from Rs. 2,000 will be applicable from 01-04-2011.

From the harmonious construction, the provisions for late filing of return can be summed up as under:

Return relates to April 2010 to September, 2010  whose due date is 25th October, 2010	If the return is to be filed on say 16th August, 2011. In such case, penalty will be Rs. 15,800 [Rs 2,000 till 31-03-2011 plus Rs. 100 for every day for 138 days from 01-04-2011]
Return relates to October 2010 to March, 2011  whose due date is 25th April, 2011	If the return is to be filed on say 16th August, 2011. In such case, penalty will be Rs. 9,300 [Rs 1,000 till 25-05-2011 plus Rs. 100 for every day for 83 days from 26-05-2011]

 

Hope, the above point has resolved the issue.

Regards,

CA Rohan Thakkar

+91 922 872 05 36

[SNEHAL SHAH]

Sir,

up to 31-03-2011 Penaly Maximum Rs.2000/- , after that from 01-04-2011 onwards panalty will be Rs.20000/- Maximum .

Other Clarification are as under  :

In addition, Rule 7C of the Finance Act states the amount to be paid if there is delay in submission of return. The amount to be paid is as under.

Period of delay	Amount to be paid
15 days	Rs. 500
More than 15 days but upto 30 days	Rs. 1,000
More than 30 days	Rs. 1,000 + Rs. 100 for every day till the default continues subject to maximum amount stated in section 70 [i.e., maximum amount to be paid is Rs. 20,000]

 

Hope, the above point has resolved the issue.

Regards,

SACHIN SHAH

AI Summary

Late filing penalty raised; enhanced statutory cap applies and alters penalty calculation for returns spanning the change. Increase in the statutory cap on penalty for late filing of service tax returns takes effect from 1 April 2011; the scheme sets a tiered schedule of fixed amounts for short and intermediate delays and a fixed amount plus a daily incremental charge for longer delays, subject to the statutory maximum. For returns whose default spans the effective date, the penalty is computed by aggregating the amount chargeable under the pre-change regime up to the effective date and applying the post-change incremental calculation and new maximum for the subsequent period.