service tax
sharwan kumar mishra
(Querist) 21 January 2010
This query is : Resolved
sir
if i have service tax number from previous one year but i am not paying service tax to the department because i am not collecting any amount from services.please advice me what kind of action will be taken against me. thanks
regards
sharwan mishra
A V Vishal
(Expert) 21 January 2010
You will have to pay the entire dues along with interest @ 2% per month from the date the tax became due till the entire amount is paid. Further there can be other penalties and prosecution which are prescribed in the act.
Section 76 of the Finance Act, 1994 provides that any person, liable to pay Service Tax in accordance with the provisions of Section 68 of the Finance Act, 1994 or the rule made thereunder, who fails to pay such tax shall pay in addition to paying such tax, and interest on that tax in accordance with the provisions of Section 75 of the Finance Act, 1994, a penalty which shall not be less than one hundred rupees but which may extend to two hundred rupees for every day during which such failure continues, so, however, that the penalty under this clause shall not exceed the amount of Service Tax that he failed to pay. Penalties under this Section shall be over and above the payments of actual amount of tax due under Section 68 of the Finance Act, 1994 and interest under Section 75 of the Finance Act, 1994.The penalty under Section 76 is of mandatory nature and can not exceed the amount of Service tax in question.
Section 78 of the Finance Act, 1994 provides for levy of penalty for two specific default or offences, with the intent to evade the payment of Service tax: i.e.
Suppression or concealment of value of taxable service.
Furnishing inaccurate particulars of value of taxable service.
The Finance Bill 2004 has substantially enlarged the scope of Section 78 of the Finance Act, 1994 by clearly elucidating the evasion on grounds of :
Fraud.
Collusion.
Evasion.
Willful misstatement.
Suppression of facts, or any contravention under the parts or the rules.
The penalty under this section shall be a minimum of the amount of Service Tax sought to be evaded and a maximum of twice the amount of Service Tax. This penalty shall be in addition to the tax and interest payable. Thus, the penalty is a sum which shall not be less than, but which shall not exceed twice the amount of Service Tax sought to be evaded.
Guest
(Expert) 21 January 2010
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soumitra basu
(Expert) 21 January 2010
I am sorry to differ. Since you have not collected any amount from Service you should not pay any amount as Service Tax. Please note that I would like to mean that no bill has been received from Service provided by you. But if you provide service but not collected service tax then you shall have to deposit service tax along with interest. Penal action will follow. Otherwise you should file NIL Return.
A V Vishal
(Expert) 21 January 2010
Dear Basu,
Please read the Service Tax Act and understand the basic accounting principles before you differ on the subject.
The first misconception is that the taxable event in service tax is the realisation of payment. This is found in the judgement of the Tribunal where the following occurs: whereas in the case of Service Tax the taxable event is not the time of rendering of services but the same is realisation of payment for the services so rendered. If on rendering of service and in spite of raising the bills, no payments are received, liability to pay tax on such services will not arise. As such, it is clear that the tax liability has nexus with the realisation of the payments for such services and the value of such payments.
The above conclusion is defective. It relates the taxable event to the fact that the liability can vanish if no payments are made. Actually, subsequent payment has no relevance to the fact that the service has been rendered and the liability to duty has arisen. Even in the case of Customs after the act of importation (which is the taxable event) has taken place, the liability to tax vanishes if the goods are destroyed before clearance.
In the case of Central Excise also after the act of manu-facture (which is the taxable event) takes place, if the goods are destroyed, then the liability also vanishes. Taxable event does not depend on the subsequent liability to be destroyed, modified or realised. It is basically the act which makes something taxable. The Supreme Court has held that even though the taxable event is the manufacture or the production of an excisable article, the duty can be levied and collected at a later date
It is well settled by several Supreme Court judgements that the act of manufacture is the taxable event in excise, the act of import is the taxable event in the case of import duty, the act of exportation is the taxable event in the case of export duty, and the act of sale is the taxable event in the case of sales tax. In the same vein the act of adding value is the taxable event in the case of value added tax. And in the case of service tax the taxable event is the act of rendering service. It cannot be the realisation of payment for service.
