Rule 07C, Service Tax Rules

[Harsh Jindal]

Can anyone please explain Rule 07C of service tax rule 1994.?

[YAGAY andSUN]

Payment of late fee/amount for delay in filing of Service Tax Returns- Section 70 read with Rule 7C,[ Inserted vide Notification No. 20/2007 dated 12.05.2007] of STR, 1994.

With effect from 08-04-2011

 

Delay inDays	Latefees/Amount Payable
Up to 15 days	Rs. 500/-
16 to 30 days	Rs. 1000/-
More than 30 days	Rs. 1000+ Rs. 100 for each day of subsequent delay.  However, total amount of Additional Fee under Rule 7C read with Section 70 shall not exceed Rs. 20000/-

Note: - The delay is to be calculated from the day immediately succeeding the last date of due date of filing of return.

It has been, inter alia, clarified in TRU letter bearing No. 334/3/2011-TRU dated 28-02-2011 that existing rate of penalty under Rule 7C read with Section 70 shall not exceed Rs. 20000/- is being retained. The maximum penalty is presently reached after a delay of 40 days.  The new limit [of Rs. 20000/-] that up to delay of 40 days in filing of Service Tax Return, the new limit becomes inconsequential. Looking from another perspective, the new limit will come into play only when there is a delay of more than 40 days in filing of Service Tax Return.  The revised higher monetary limit of Rs. 20000/- has come into force with effect from 08-04-2011.

AI Summary

Late fee regime for service tax returns sets tiered charges with a cap limiting aggregate additional fee liability. Late fee for delayed filing of service tax returns is set by the service tax rule read with the statutory provision: a tiered fee structure applies depending on the length of delay measured from the day after the due date, culminating in a daily incremental charge for prolonged delay, but aggregate additional fee liability is subject to an overall monetary cap. Administrative guidance confirms retention of the cap and explains the period after which the cap comes into effect.