Service Tax Default or Evasion Related Facets of Penalty Below Part 76

Service Tax Default or Evasion Relevant Aspects of Penalty Under Section 76

1. Part 76 of Finance Act,1994 : Penalty beneath part 76 of the Finance Act, 1994, as amended by the Finance Act,2015, w.e.f.14.05.2015, is to be levied in following circumstances the place: (a) Service tax has not been levied or paid, or has been short-levied or short-paid, or erroneously refunded, (b) Such non-levy, non-payment, short-levy, short-payment or faulty refund has occurred for any motive, aside from the explanation of fraud or collusion or wilful misstatement or suppression of information or contravention of any of the provisions of the Act or of the foundations made thereunder with the intent to evade fee of service tax, and (c) The individual has been served a discover beneath part 73 (1). 2. Most quantity of penalty:- An individual who has been served a discover beneath part 73(1) could be liable to pay penalty beneath part 76, not excluding 10% of such quantity as talked about in discover .The penalty is along with service tax and curiosity thereon as specified within the discover. Additional, the Adjudicating Authority could at his discretion to impose even lesser quantity of penalty relying on the timing of the fee of service tax and curiosity and such lesser quantity could also be from nil to 25%as follows: (a) In case, service tax and curiosity are paid inside a interval of 30 days of the date of service of show-cause discover beneath part 73(1) — No penalty is inconceivable. (b) In case, service tax and curiosity are paid inside a interval of 30 days of the date of receipt of the Adjudication Order handed beneath part 73 (2) — Solely 25% of the penalty imposed within the order.

It’s to be famous that advantage of discount in penalty shall be obtainable provided that such lowered penalty could be paid inside such interval. For instance : If discover was acquired on 1.7.2015 demanding service tax of 10 lakh (non- evasion case) then if service tax and curiosity thereon was paid by 1.8.2015, no penalty was to be levied. In another case, penalty as much as 1,00,000 could be imposed. 3. Impact of Appellate/Courtroom’s order beneath part 76(2):- The place Commissioner (Appeals), the Tribunal or, the Courtroom modifies the service tax decided beneath part 73 (2) then, the quantity of penalty payable thereon shall additionally stand to be modified accordingly. Additional, the place penalty quantity will get lowered consequent to Appellate/ Courtroom order (such order).The advantage of lowered penalty beneath the proviso to sub-section (1) shall be obtainable if the service tax, curiosity and lowered penalty so payable, is paid inside a interval of 30 days from the date of receipt of the order by which such modification is made. It’s to be famous that the lowered or in any other case of the quantity of penalty shall be payable and counted from the date of such order of the Commissioner or the Tribunal or the Courtroom , because the case could also be. 4. Pendency of proceedings on 14-5-2015:- By the Finance Act 2015, w.e.f. 14.5.2015, a brand new part 78B was inserted. The sub-section (1) of 78 B offers that the place in any case,(a)Service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded and a discover has been served beneath part73 (1) or beneath the proviso thereto, earlier than 14-5-2015; or(b)Service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded and a discover has been served beneath part 73 (1) or beneath the proviso thereto, however no order has been handed beneath part73 (2) , earlier than 14-05-2015, then, in respect of such instances, the provisions of part 76 or of part 78, because the case could also be, as amended by the Finance Act, 2015, shall be relevant. Additional, the place Adjudication proceedings was pending as on 14.5.2015 and in respect of which show-cause discover is issued after the stated date, penalty beneath part 76 shall be imposable in accordance with the substituted sections 76 and 78. 5. Rationalization of provisions:- The Finance Act, 2015, w.e.f 14.5.2015, has rationalized the penalty sought to be imposed beneath part 76. It’s to be famous that provisions of part 80 had been omitted concurrently, which exhibits that now the Adjudicating Authority is just not vested with any discretion to dispense with the imposition of penalty, besides as supplied beneath proviso to part76 (1) .Previous to 14-5-2015, part 76 was coated by part 80 which supplied that penalty beneath part 76 was not imposable the place assessee proved cheap reason for the failure to pay service tax. Therefore, imposition of penalty was not necessary in all instances. Penalty beneath part 76 payable for various durations in view of a number of amendments made and now could be levied in line with interval of default

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