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Belated returns in service tax
November, 10th 2014

Finance Act, 2007 had amended section 70(1) w.e.f. 11-5-2007 for belated furnishing of service tax returns on payment of prescribed late fees which shall not exceed ₹ 2000 (Rs. 20,000 w.e.f. 8-4-2011 as amended by the Finance Act, 2011). Simultaneously, section 94(2) had also been amended so as to empower the Central Government to make rules to prescribe the form, manner and frequency of service tax returns to be furnished and the prescription of late fees for delayed furnishing of returns by the assessees under section 70(1).

Ministry of Finance (TRU) vide letter No. 334/1/2007-TRU dated 28.2.2007 explained the amendment as follows -

“At present filing of a return after the due date is treated as a violation and is liable for penal action. It is proposed to prescribe a specified amount of late fee linked to period of delay for filing of return after the due date. The assessee is required to pay the amount prescribed depending upon the period of delay. For this purpose, section 70(1)is being amended. After the proposed amendment in section 70(1) comes into force, appropriate rules will be notified indicating the conditions and the amount to be paid for delayed filing of return.”

Whereas late filing of returns under section 70 has been allowed by Finance Act, 2007,Notification No. 20/2007-ST dated 12.5.2007 has inserted new Rule 7C in Service Tax Rules, 1994 so as to provide for amount to be paid for delay in furnishing the prescribed return undersection 70.

Prescribed fees

Prescribed late fee as per Rule 7C shall be as under -

- Delay of 15 days (from the last due date) ₹ 500

- Delay of more than 15 days but up to ₹ 1000 30 days (from the last due date)

- Delay of more than 30 days ₹ 1000 plus ₹ 100 per day (from the Last due date) of delay from the 31st day till the date of furnishing the return.

W.e.f. 1-3-2008, Rule 7C empowers the Central Excise Officer to use his discretion to reduce or waive the penalty for delayed filing of return, where the gross amount of service tax payable is nil (Vide Notification No. 4/2008-ST, dated 1-3-2008).

It may be noted that the Finance Act, 2011 had enhanced the amount of maximum late fee to ₹ 20,000. w.e.f. 8-4-2011.

Rule 7C stipulates that -

(a) such payment of late fee is fixed and no discretion vests on lowering or enhancing of amount.

(b) It is for the assessee to opt for the late fee payment made to avoid penal proceedings.

(c) If the late fee amount as aforesaid is paid, penal provisions for delayed submission of return shall be deemed to be concluded and no penalty be levied.

(d) The amount of late fee is linked to period of delay but the maximum amount is only ₹ 2000 irrespective of days of delay.

(e) In case of pending proceedings, if the late fee is paid within 60 days from 11.5.2007, such pending proceedings shall be deemed to be concluded.

Time Period

W.e.f. 1.3.2008, Rule 7B of Service Tax Rules have been amended vide N. No. 4/2008-ST dated 1.3.2008 to provide file for filing of revised return to correct mistake or omission within a period of 90 days instead of 60 days as stipulated prior to 1.3.2008. Thus, w.e.f. 1.3.2008, revised returns can be filed within a period of 90 days from the date of submission of original return.

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