Penalty Provisions under Service Tax

An analysis of Penalty Provisions under Service Tax

Penalties have been prescribed under different sections for different types of offences.

Sr. No.	Section	Offence	Details
1	76	Failure to pay service tax	a. Penalty not less than Rs.100/- for every day during which failure continues, or b. @ 1% of such tax per month whichever is higher But the penalty shall not exceed 50% of service tax due.
2	77	General penalty for contravention of any provisions of chapter V of Finance Act, 1994  or rules made there under for which no penalty is provided	a)    Failure to take registration  Rs. 10000 or Rs. 200 per day during  which failure continues,  Whichever is higher. b)    Failure to keep, maintain or retain records- Up to Rs.10000/-. c)     Failure to furnish information, to produce documents called for by Central Excise Officer or To appear before the Central Excise Officer-  Up to Rs.10000/- or Rs. 200 per day during which failure continues. d)    Failure to pay tax electronically by the person required to pay tax electronically-  Up to Rs.10000/-. e)    Failure to issue correct invoice with complete details and account for the invoice in his books of accounts_ Up to Rs.10000/- For contravention of any other provisions of the Act where no separate penalty is provided- Up to Rs.10000/-
3	78	Service tax not been levied or paid or been short-levied or short-paid or erroneously refunded by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of chapter V of Finance Act, 1994 or of the rules made there  under with intent to evade payment of service tax	a. Penalty be the amount equal to the amount of Service tax not levied or paid or short-levied or short paid or erroneously refunded. But  1. Where true accounts are available in specified records, the penalty is reduced to 50%.  2. Where the service tax and interest is paid within 30 days, from the date of communication of the order the penalty is 25%. 3. The reduced penalty is available only if the penalty is paid within 30 days of the date of communication of the order.
4	70(1) & Rule 7C	Late filing of returns	Late fee up to Rs.20000/- (Maximum) a)Delay up to 15 days-Rs.500/- b) Delay beyond 15 days and up to 30 days-Rs.1000/- c) Delay beyond 30 days-Rs.1000/- plus Rs.100 per day of delay beyond 30 days Provided the total amount payable in terms of this rule shall not exceed the amount specified in Sec.70 of the Act.(Rs 20000).

1. Section 80 provides for  non imposition of penalty under section 76, 77 ,78 if reasonable cause for such failure is proved by the defaulter.

 2. Section 78 is applicable only in  cases of suppression, fraud etc with an intention to evade payment of tax. In such cases section 77 is not applicable.