According to section 69 of the Finance Act, 1994, every person liable to pay the Service Tax under Chapter V or the rules made there under shall, within such time and in such manner and in such form as may be prescribed, make an application for registration to the Superintendent of Central Excise.
Registration of Assessees
In terms of Section 69 of the Finance Act, 1994 (Chapter V) read with Rule 4 of the Service Tax Rules, 1994 -
Every person who has provided a taxable service of value exceeding ₹ 9 lakhs, in the preceding financial year, is required to register with the Central Excise or Service tax office having jurisdiction over the premises or office of such service provider.
In case of recipient liable to pay service tax under section 68(2) including importer of services, he is required to obtain registration.
The 'Input Service Distributors' are also required to register them as per Notification No. 26/2005-ST, date 7.6.2005 as amended.
Persons liable to pay service tax under reverse charge mechanism.
An assessee has to register all locations from where taxable services are provided, or opt for one single registration. Amendments have been made to Rules 4(2) and 4(3) of the Service Tax Rules, 1994 to facilitate more than one centralized registration, i.e. more than one office of an assessee such as his zonal or regional office depending upon their centralized billing or accounting systems.
(B) Payment of Service Tax (Section 68)
Section 68 contains statutory provisions relating to payment of service tax. As per Section 68(1), the responsibility of paying the Service Tax vests with the person who is providing the taxable service except in cases where person liable to pay tax is not a service provider as per section 68(2).
Under sub-Section (1), Service Tax shall be paid within such period as may be prescribed; i.e., monthly or quarterly by 5th of the following month or quarter after the end of relevant month or quarter, as the case may be. In case of tax payable by individuals, proprietary concerns and partnership firms, it is payable on a quarterly basis. Thus, for the quarters ending in March, June, September and December, tax is payable by 5th of April, July, October and January respectively. In case of corporate and other assessees, tax is payable on a monthly basis i.e., for each calendar month, tax is payable by 5th day of the following month.
E-payment of Central Excise and Service Tax
E-payment is a mode of payment in addition to the conventional methods of payment offered by the banks under specific security norms of Reserve Bank of India. This scheme facilitates anytime, anywhere payment and an instant cyber receipt is generated once the transaction is complete. It provides the convenience of making online payment of Central Excise and Service Tax through Bank’s Internet banking service.
Vide Notification No. 9/2014-ST dated 11.07.2014, e-payment of Service Tax is mandatory w.e.f. 01.10.2014 for all assessees. However, relaxation from e-payment may be allowed by the Deputy Commissioner or Assistant Commissioner on case to case basis.
Rule 6(2) of the Service Tax Rules, 1994 has been amended with effect from 01.10.2014 to provide that –
every assessee shall electronically pay the service tax payable by him, through internet banking; and
the Assistant/Deputy Commissioner of Central Excise having jurisdiction, may – for reasons to be recorded in writing, allow the assessee to deposit the service tax by any mode other than internet banking
(C) Returns (Form ST-3, ST-3A)
Returns of Service Tax
The provisions relating to returns of Service Tax are contained in Sections 70 and 71A of the Finance Act, 1994 (as amended) and Rule 7 and 7A of the Service Tax Rules. Returns are required to be filed in prescribed Form ST-3, ST-3A or ST-3B in specific cases. E-filing of returns is mandatory w.e.f. 1.10.2011 for all assessees and in respect of all taxable services.
Furnishing of Returns
Section 70 contains provision for furnishing and filing of Service Tax returns.
According to Section 70(1), "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 as may be prescribed".
Notification No. 26/2005-ST dated 7.6.2005 stipulates that such persons would be -
input service distributors
(b) provider of output service whose aggregate value of taxable services in a financial year exceeds specified limit, presently rupees nine lakh.
For the half year: To be filed by
1st April to 30th September 25th October
1st October to 31st March 25th April
According to Rule 7, every assessee shall submit a half-yearly return in Form ST-3 or ST-3A as the case may be, along with a copy of the Form TR-6 in triplicate for the six months covered in the half-yearly return. However, there is no such requirement to submit/deposit the hard copies of challans along with return copy to the Department as the return are now filed online.
Every assessee shall submit the half yearly return by the 25th of the month following the particular half year except as notified otherwise for any specific period.
E-filing of Returns
The e-filing is a facility for electronic filing of service tax returns through the internet.
In the case Central Excise or Service Tax return filed on-line, ACES application software acknowledges it by displaying an Acknowledgement message.
Revision of Service Tax Return (Rule 7B)
W.e.f. 1.3.2008, Rule 7B of Service Tax Rules, 1994 was amended vide Notification No. 4/2008-ST dated 1.3.2008 to provide file for filing of revised return to correct mistake
Rule 7B provides as follows -
"An assessee may submit a revised return, in Form ST-3, in triplicate, to correct a mistake or omission, within a period of sixty [ninety w.e.f. 1-3-2008] days from the date of submission of the return under rule 7.
(D) Invoice (Rule 4A of Service Tax Rules, 1994)
Every person providing taxable service shall , not later than thirty days from the date of provision of such taxable service or receipt of any payment towards the value of such taxable service, whichever is earlier, issue an invoice, a bill or, as the case may be, a challan signed by such person or a person authorized by him in respect of such taxable service provided or agreed to be provided and such invoice, bill or, as the case may be, challan shall be serially numbered and shall contain the following, namely:-
(i) the name, address and the registration number of such person;
(ii) the name and address of the person receiving taxable service;
(iii) description and value of taxable service provided or agreed to be provided;
(iv) the service tax payable thereon.
(E) Records (Rule 5 of Service Tax Rules, 1994)
Records include computerized data as maintained in accordance with the various laws.
Records maintained shall be acceptable to Central Excise Officer.
Every assessee is required to furnish to Central Excise officer at the time of filing his return for the first time, a list in duplicate of -
all the records prepared or maintained by the assessee for accounting of transaction in regard to-
providing of any services
receipt of input services
payment of input services
Receipt/ purchase/manufacture/storage/sale or delivery as the case may be, in regard of inputs and capital goods.
Other activities such as manufacture and sale of goods , if any.
All other financial records maintained in normal course of business.
All such records should be preserved at least for a period of five years
Records under this rule may be preserved in electronic form and every page of the record so preserved shall be authenticated by means of a digital signature. (w.e.f 01.03.2015)
INTEREST ON DELAYED PAYMENT OF SERVICE TAX (SECTION 75)
Person who fails to deposit the tax or any part thereof within the prescribed period (Rule 6) is liable to pay interest under section 75 of the Finance Act, 1994.
Interest is payable on the amount of service tax due.
Interest is not penal in nature.
Levy of interest is automatic and compensatory in nature.
Interest under section 75 is mandatory liability.
No discretion with any authority / appellate forum .
Interest rate is 18% p.a. upto 30.09.2014 (except in case of specified persons)
W.e.f. 01.10.2014, interest rate applicable is 18 %/ 24% / 30% for 6/6/12 months
70 (Rule 7C)
Belated filing of returns
For delay of 15 days - ₹ 500;
For delay between 16-30 days - ₹ 1000
For delay beyond 30 days - ₹ 1000 + ₹ 100 per day of default subject to maximum amount as prescribed under section 70 2000; Finance Act, 2011 has enhanced the maximum limit
₹ 20,000 w.e.f. 8-4-2011)
Delay in payment of service tax where record of transactions is available in specified records and assessee pays tax, interest and penalty during audit/ verification/investigation.
Reduced penalty of 1 per cent per month of tax amount for the period of default subject to maximum of 25 per cent of the tax amount
Delay in payment of service tax on amount collected in excess
Simple interest @ 13 per cent per annum (w.e.f. 1.4.2011, @ 18% p.a.) Simple interest @ 15% p.a. w.e.f. 8.4.2011 for assessees whose turnover in below ₹ 60 lakhs in financial year/preceding financial year.
To protect revenue in certain cases
Provisional attachment of property during pendency of proceedings.
Delay in payment of Service Tax
Interest @ 18%, 24% and 30% for first 6 months, further 6 months and after one year; Simple interest @ 15% p.a. w.e.f. 8.4.2011 for assessees whose turnover is below ₹ 60 lakhs during the financial year/preceding financial year. 3 interest @18%, 24% and 30% for first 6 months, further 6 months and after one year.
Penalty for failure to obtain registration
A fixed sum of ₹ 500 (non-discretionary for failure to make an application for registration under section 69 or Rule 4).
Failure to pay Service Tax
Where Notice served u/s 73 (1) – Maximum penalty not exceeding 10% of the amount of Service Tax.
Where Service Tax and interest deposited within 30 days of the date of service of notice, no penalty payable.
Where Service Tax and interest deposited within 30 days from date of receipt of the order at the Central Excise Officer u/s 73(2) – penalty payable @25% of the penalty imposed in that order.
Where Service Tax and interest deposited within 30 days from the order of Commissioner Appeals/ Tribunal / Court as per modified order, penalty payable @25% of the modified penalty imposed in that order].
(a) Failure to obtain registration by person liable to pay service tax or person required to take registration as per section 69 orRule 4 of the Service Tax Rules 1994
₹ 200 per day for every day till such failure continues after the due date till the actual compliance or upto ₹ 10,000 (w.e.f. 8.4.2011) whichever is higher; recently upto ₹ 10,000 w.e.f. 10.5.2013
(b) Failure to keep, maintain or retain books of account, other documents as per provisions/rules.
Minimum not prescribed but upto a maximum of ₹ 10,000 (w.e.f. 8.4.2011)
(c) Failure to furnish information called by officer as per provisions/ rules
₹ 200 per day of default till the actual compliance from the first day after the due date till the date of actual compliance or up to ₹ 10,000 (w.e.f. 8.4.2011) whichever is higher.
Failure to produce documents called by central excise officer as per provisions/rules
₹ 200 per day of default till the actual compliance from the first day after the due date till the date of actual compliance or up to ₹ 10,000 (w.e.f. 8.4.2011), whichever is higher.
Failure to appear before central excise officer when served with summon for appearance to give evidence or to produce any document in an enquiry.
₹ 200 per day of default till the actual compliance from the first day after the due date till the date of actual compliance or up to ₹ 10,000, (w.e.f. 8.4.2011) whichever is higher.
(d) Failure to pay service tax electronically, through internet banking, where required to pay electronically.
Minimum not prescribed but amount which may extend to ₹ 10,000 per default (w.e.f. 8.4.2011)
(e) Issuance of invoice with incorrect or incomplete details or failure to account for invoice in books of account
Minimum not prescribed but amount which may extend upto ₹ 10000 (w.e.f. 8.4.2011)
(2) Contravention of any provisions or rule for which no separate penalty is prescribed
Minimum not prescribed but maximum penalty which may extend upto ₹ 10000 (w.e.f. 8.4.2011)
Suppressing value of taxable service, i.e., service tax not levied or paid or short levied or paid or erroneously refunded due to fraud etc.
Amended Penalty as per Finance Act, 2015(w.e.f. 14.5.2015)
Penalty will be 100% of Service Tax not paid;
Penalty reduced to 15% of the service tax demanded, if service tax, interest and penalty are paid within 30 days of service of show cause notice;
A reduced penalty equal to 25% of the Service Tax amount, determined by the Central Excise Officer by an order, is to be paid if the Service Tax interest and reduced penalty is paid within 30 days of such order;
Penalty reduced to 25% of the penalty determined, if service tax, interest and penalty are paid within 30 days of adjudication order or appellate order.
Specified contraventions by Company's directors, manager, secretary or other officers etc
Monetary penalty up to ₹ 1 lakh
Failure to comply with notice
A sum which shall not be less than ten per cent but which shall not exceed fifty per cent of the amount of the service tax that would have been avoided, had the return accepted as correct.
Non-payment of amounts due to Central Government.
Recovery of amount from third parties, attachment and sale of property and as arrears of land revenue.
On cases of non-issuance of invoice, wrong CENVAT credit, false books of accounts, non-payment of tax collected where amount exceeds 50 lakhs.
Prosecution/imprisonment for a period from 6 months to 7 years.
Cognizance of offences - cognizable offences / non-cognizable and bailable offences
Prosecution/imprisonment based on nature of offence
Offences as per section 89(1)
Arrests for cognizable/non-cognizable and bailable offences in terms of Code of Criminal Procedure, 1973
Rule 14 ofCENVAT Credit Rules, 2004
Credit wrongly taken and [or prior to 1-4-2012] utilized or erroneously refunded
As per section 11A or 11AA of Central Excise Act/Section 73 and 75 of Finance Act, 1994,
Rule 15(2)of CENVAT Credit Rules, 2004
Taking of credit wrongly or wrong utilization of credit or erroneous refund
Confiscation of goods; ₹ 2,000 or duty involved, whichever is greater.
w.e.f. 14-5-2015, Confiscation of goods; penalty as per section 11AC (1)/(b) of Central Excise Act/ /Section 76(1) of Finance Act, 1994
Rule 15A ofCenvat Credit Rules, 2004
General penalty for contravention of any rule for which no specific penalty is prescribed