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NEW PENAL PROVISIONS IN SERVICE TAX (PART -2) - Change in section 78

Service Tax - By: - Dr. Sanjiv Agarwal - Dated:- 17-6-2015 - Amendment made by Finance Act, 2015 (w.e.f. 14.05.2015) The Finance Act, 2015 has substituted section 78 as under: Section 78: Penalty for failure to pay Service Tax for reasons of fraud etc 78. (1) Where any service tax has not been levied or paid, or has been short-levied or shortpaid, 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 .....

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nder the proviso to sub-section (1) of section 73, the penalty payable shall be fifteen percent 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 percent of the service tax so determined: Provided also that the benefit of reduced penalty under .....

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ifies the amount of service tax determined under sub-section (2) to section 73, then the amount of penalty payable under sub-section (7) and the interest payable thereon under section 75 shall stand modified accordingly, and after taking into account the amount of service tax so modified, the person who is liable to pay such amount of service tax, shall also be liable to pay the amount of penalty and interest so modified. (3) Where the amount of service tax or penalty is increased by the Commiss .....

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s and reasons of Finance Bill, 2015, objective of the amendment is to substitute a new section for section 78 of 1994 Act relating to penalty for failure to pay service tax by reason of fraud, collusion, willful mis-statement, suppression of facts or contravention of the provisions of the Act or the rules made thereunder with the intent to evade payment of service tax. Accordingly, section 78 has been amended to rationalize penalty, in cases involving fraud or collusion or wilful mis-statement o .....

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e officer by an order, is to be paid if the Service Tax, interest and reduced penalty is paid within 30 days of such order; and if the Service Tax amount gets reduced in any appellate proceeding, then the penalty amount shall also stand modified accordingly, and benefit of reduced penalty (25%) shall be admissible if Service Tax, interest and reduced penalty is paid within 30 days of such appellate order. Section 78 has been substituted to simplify and rationalize the penal provisions where the .....

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ax amount involved in such cases; (ii) Penalty equal to 15% (earlier 25%) of the service tax amount is to be paid if service tax, interest and reduced penalty is paid within 30 days of service of notice in this regard; If it is so paid, proceedings in respect of such Service Tax, interest and penalty shall be deemed to have been concluded. (iii) 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, intere .....

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records for the period from 8.4.2011 to enactment date of Finance Act, 2015 (14.05.2015), penalty shall be 50 percent of the Service Tax so determined. The transaction must be recorded in specified records. Specified records means records including computerised data as are required to be maintained by an assessee in accordance with any law for the time being, in force or where there is no such requirement, the invoices recorded by the assessee in the books of accounts shall be considered as the .....

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