SECTION 76: PENALTY FOR FAILURE TO PAY SERVICE TAX ( FOR NON FRAUD CASES)
(1) Where service tax has not been levied or paid, or has been short-levied or short-paid, or erroneously refunded, for any reason, other than the reason of fraud or collusion or wilful misstatement or suppression of facts or contravention of any of the provisions of this Chapter or of the rules made there under with the intent to evade payment of service tax, the person who has been served notice under sub-section (1) of section 73 shall, in addition to the service tax and interest specified in the notice, be also liable to pay a penalty not exceeding ten per cent of the amount of such service tax.
RELAXATION IN PENALTY PAYMENT
Provided that where service tax and interest is paid within a period of thirty days of
i) The date of service of notice under sub-section (1) of section 73, no penalty shall be payable and proceedings in respect of such service tax and interest shall be deemed to be concluded;
ii) The date of receipt of the order of the Central Excise Officer determining the amount of service tax under sub-section (2) of section 73, the penalty payable shall be twenty-five per cent of the penalty imposed in that order, only if such reduced penalty is also paid within such period.
SECTION 78: PENALTY FOR FAILURE TO PAY SERVICE TAX ( FOR FRAUD CASES)
When service tax has been not ‘levied or paid’ or has been ‘short-levied or short-paid’ or ‘erroneously refunded’, by any of the below mentioned reason:
(1) Fraud
(2) Collusion
(3) Wilful Misstatement
(4) Suppression of facts
(5) Contravention of any of the provisions of this chapter or of the rules made there under with intent to evade payment of service tax,
The person, who has been served notice under sub section (1) of section 73 shall, in addition to service tax and interest specified in the notice , be liable to pay penalty which shall be equal to hundred per cent of such amount of service tax.
E.g. if the amount of service tax (short paid, not paid, short levied, not levied or erroneously refunded) was Rs. 1,00,000/- then penalty shall be Rs. 1,00,000 and total amount payable shall be Rs. 200000 plus interest.
RELAXATION IN PENALTY PAYMENT
Provided further that where service tax and interest is paid within a period of thirty days of
i) The date of service of notice under the proviso to sub-section (1) of section 73, the penalty payable shall be fifteen per cent of such service tax and proceedings in respect of such service tax, interest and penalty shall be deemed to be concluded.
ii) The date of receipt of the order of the Central Excise Officer determining the amount of service tax under sub-section (2) of section 73, the penalty payable shall be twenty-five per cent of the service tax so determined.
Provided also that the benefit of reduced penalty under the second proviso shall be available only if the amount of such reduced penalty is also paid within such period.
EXAMPLE
If notice has been served under section 73(1) CEO is of Rs. 100000 on 1.1.2015 and all the three i.e. service tax, interest and penalty has been paid within till 31.01.3015 then in this case penalty shall be 15% i.e. Rs. 15000.
If Service Tax determined u/s 73(2) by Central Excise Officer is Rs. 1,00,000/- on 01-01-2015 and all the three i.e. Service Tax, Interest and Penalty (Reduced Amount) is paid within 31.01.0215 then penalty would be Rs. 25,000/-
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