Under the existing scheme of law, Rule 7 of the Service tax Rules, 1994 read with its sub-rules deals with the provisions relating to the filing of service service tax return.
Rule 7C Prescribe the Penalty which Assessee has to Pay if there is delay in filing of service Tax Return.
We are producing herebelow the extract of Rule 7C
Where the return prescribed under rule 7 is furnished after the date prescribed for submission of such return, the person liable to furnish the said return shall pay to the credit of the Central Government, for the period of delay of-
(i) fifteen days from the date prescribed for submission of such return, an amount of five hundred rupees;
(ii) beyond fifteen days but not later than thirty days from the date prescribed for submission of such return, an amount of one thousand rupees; and
(iii) beyond thirty days from the date prescribed for submission of such return an amount of one
thousand rupees plus one hundred rupees for every day from the thirty first day till the date of
furnishing the said return:
(i) fifteen days from the date prescribed for submission of such return, an amount of five hundred rupees;
(ii) beyond fifteen days but not later than thirty days from the date prescribed for submission of such return, an amount of one thousand rupees; and
(iii) beyond thirty days from the date prescribed for submission of such return an amount of one
thousand rupees plus one hundred rupees for every day from the thirty first day till the date of
furnishing the said return:
Provided the total amount payable in terms of this rule shall not exceed the amount specified in Sec.70 of the Act.
It is clear from the above that above penalty is subject to maximum specified in section 70. Section 70(1) Specify the maximum Penalty of Rs. 2,000/- in respect of return filed up to 31st March 2011. This amount of Maximum Penalty is been increased to Rs. 20,000/- (Twenty Thousand only) w.e.f. 01.04.2011.
As per Section 71 (C) of the Finance Act 2011 (8 of 2011) Applicable from 1st April Unless Otherwise specified there was an amendment in Sub Section (1) of section 70 which is as follows:-
‘in Section 70 (1) of the Finance Act, 1994, for the words “two thousand rupees”, the words “twenty thousand rupees” shall be substituted’.
After Considering the above amendment the Maximum Penalty for Late Filing of Service Tax Return is been increased to 20000/- (Twenty Thousand) w.e.f. 01.04.2011 from earlier 2000/- (Two Thousand).
After enactment of Finance Bill 2011, the following position will emerge out:
| Period of Delay | Penalty/late fee before finance bill 2011 | Penalty/late fee After Finance Act, 2011 (W.e.f. 01.04.2011) |
| for delay up to 15 days | INR 500 | INR 500 |
| for delay beyond 15 days but up to 30 days | INR 1,000 | INR 1,000 |
| for delay beyond 30 days | INR 1,000 + INR 100 per day (from 31st day subject to a maximum amount of Rs 2000. | INR 1,000 + INR 100 per day (from 31st day subject to a maximum amount of Rs 20000. |
‘Provided also that where the gross amount of service tax payable is nil, the Central Excise officer may, on being satisfied that there is sufficient reason for not filing the return, reduce or waive the penalty’.
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