TMI BlogHow to apply new Service Tax Interest Rate ??X X X X Extracts X X X X X X X X Extracts X X X X ..... Sir, As the finance bill, 2016 is enacted on 14.05.2016, new rate of interest is also get effected. how new rate of interest will be apply in for earlier transaction ?? Is there any provision in this regard...? - Reply By KASTURI SETHI - The Reply = Sh.Abbas Mukhi Ji, For the past transactions i.e. prior to 13.5.2016 old rates of interest are applicable. - Reply By Rajagopalan Ranganathan - The Reply = Sir, With due respects to the views of Shri. Kasturi Sir, my view is that date of payment of in terest is the criterion. If the interest is paid on or after 14.5.2016 even for the demand raised prior to 14.5.2016 the rate of interest will be 15% only. - Reply By Ganeshan Kalyani - The Reply = Sir I t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oo vote for Sri Rajagopalan Sir's view. Thanks. - Reply By KASTURI SETHI - The Reply = Sh.Ganeshan Kalyani Ji, During the presentation of Budget, 2016, the Govt. declared that rate of interest would be reduced to 15% from the date of enactment. Every body knows that if budget is presented in the last week of February, the expected date of enactment is in first or second week of May. Now supposing if ST was due in Jan, Feb and March and was deposited late without payment of interest, do you think the department has allowed them to wait for reduced rate of interest till the date of enactment ? Pl. re-discuss. - Reply By KASTURI SETHI - The Reply = Sh.Ganeshan Kalyani Ji, Have you watched video/article titled as Finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Bill, 2016 :enacted changes effective from 14.5.16 by Sh. Bimal Jain, famous lawyer ? If not, watch now.This video talks applicability of rate of interest. This is our healthy discussion in sportsman spirit. We should arrive at some concrete conclusion. We should leave the issue undecided. Thanks Regards. K.L.SETHI - Reply By Rajagopalan Ranganathan - The Reply = Dear kasturi Sir, My view is as follows: - If the delaued serv ice tax is paid on or after enactment of finance Bill 2016 then the new rate of interest is payable. If the service tax paid before enactment of Finance Bill 2016 then ratre of interest prevailing on the date of service tax after delay then the rate interest applicable on the date of payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of service tax after delay is applicable. - Reply By RISHIPAL MALIK - The Reply = Sir, With due respects to the views of Shri. Kasturi Sir, my view is that date of payment of in terest is the criterion. If the interest is paid on or after 14.5.2016 even for the demand raised prior to 14.5.2016 the rate of interest will be 15% only. - Reply By CS SANJAY MALHOTRA - The Reply = Dear Friends, Agree to Mr Rajagopalan views and Rate of Interest is the interest as prevalent at the time of duty demand. ( Reason : Rules amended have to be given full effect or else the same would become redundant ) R/ Kasturi ji , your contention is valid that the interest should be at the rate applicable at the time the duty payable is due, but the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons are defined in such a manner that rate of Interest as prevailing at the time of duty demand is recoverable and not when the tax was due. Normally I have seen (practically yourself have also noticed during your stay with deaprtment) that few assessee's don''t contest and deposit Interest as falling before the amendment and after amendments if their liability arises in 2 different periods, but same is wrong practice should not be resorted to. All SCN have phrase Interest as applicable and APPLICABILITY is as per the rate of interest prevalent at the time of demand of duty Lets appreciate Sh. Rajagopalan views.. - Reply By KASTURI SETHI - The Reply = Sh.CS Sanjay Malhotra Ji, Agreed, Sir. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hanks for clarification. - Reply By KASTURI SETHI - The Reply = Sh.CS Sanjay Malhotra Ji, I always peruse your replies word for word twice or thrice to grasp the real meaning and message contained therein. In this reply your every argument is full of substance( legal, logical as well as practical) Virtually you have painted a true picture of the department as well as law. Hence I am convinced. Thanks again, Sir. In this forum when any conclusion is arrived at after analyzing pros. and cons., the querist and visitors of this forum form get a clear view and they are able to go ahead in right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direction. - Reply By Ganeshan Kalyani - The Reply = Really well replied by Sri Sanjay Sir and well acknowledged by Sri Kasturi Sir. In fact by giving different views than what the rest of the experts have given Sri Kasturi Sir has created a situation where we all got to know the real backgound and reason why the provision is framed in such a way. Sri Rajagopalan Sir is wise and gives reply always by referring the extract of the provision in his reply. This gives a weightage to his views and wins lot of confidence in the mind of the querist, onlookers and editor of this forum. Good to see the spirit of the experts. Thanks. - Reply By KASTURI SETHI - The Reply = Sh.Ganeshan Kalyani Ji, Sir, When I learn from you, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I am thankful to you, when I learn from Sh.CS Sanjay Malhotra, I am thankful to him, when I learn from Sh.Rangnathan, Sir, I am thankful to him. There is no an iota of hesitation to accept the views of experts, if the same are correct. Final picture be clear. One should not grope in the dark. This is my attitude in real terms .I have no mask on my face. - Reply By CS SANJAY MALHOTRA - The Reply = R/ Sh. Kasturi ji, Am aware of that though sometimes you are aware of issue, but u played otherwise so that the visitors and querist should have feel of the actual background.. Thanks to your spirit. We all learn and the same will be in place only with more and more debate or not accepting the submissions as is..... really hat's off. I s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... till recollect your submissions that none is expert and we all learn from each other as we all make mistakes and none is 100% perfect.. Thanks - Reply By Ganeshan Kalyani - The Reply = Sir I am impressed with your stlye of approach. Really it is the best approach. Either be in dark and curse it is or come out of it like a pearl from the shell. Thanks. - Reply By KASTURI SETHI - The Reply = Dear Experts, Although the issue is settled now, yet I post authority (Board's letter) in support of the views of Sh.Rajagopalan Ranganathan, Sir, Sh.Ganeshan Kalyani, Sir, Sh.CS Sanjay Malhotra, Sir ( Casting Vote) (I do not include myself as I joined the mainstream later on when casting vote was cast). An expert who posts correct reply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first, deserves kudos. Here is Sh.Ranganathan, Sir. I would attribute my misunderstanding or misinterpretation of law to the hangover of the department. It means even after a period of four since my retirement I have not come out of this hangover. Anyway, I would term it as learning curve for me at this age and stage. Sh.Abbas Mukhi Ji, querist is interested in the basis of the applicability of rate of interest. Here is relevant extract of Board's D.O. Letter F. No. 334/15/2014-TRU, dated 10-7-2014 when rate of interest was increased. - Reply By Ganeshan Kalyani - The Reply = Thanks you Sri Kasturi Sir for submitting the update.Thanks. - Reply By vijay kumar - The Reply = Dear Mr.Abbas, Please refer to the TRU Circular p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osted above by Mr.Sethi. Accordingly, the rate of interest prevailing under the respective notifications will apply, when the tax due falls under those periods. For example, if a tax became due in Jan, 2013 and paid on 31.5.2016, following rates will apply: From 5.2.2013 to 30.9.2014 - 18% From 1.10.2014 to 13.5.2016 - 30% (since tax was due for more than one year as on 1.10.2014) From 14.5.2016 to 31.5.2016 - 15%. If we apply the 15% rate across the board, the earlier notifications will become redundant. More over, those who have paid the tax and interest earlier will be placed on different footing to those paid the tax after 14.5.2016. In my view, the above calculation is as per the TRU letter issued by the Board. You may calculate y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our liability accordingly. - Reply By KASTURI SETHI - The Reply = Dear Sir, Pl. read the judgement of Supreme Court on this issue. SUCHITRA COMPONENTS LTD. Versus COMMISSIONER OF C. EX., GUNTUR 2008 (11) S.T.R. 430 (S.C.) - 2007 (1) TMI 4 - SUPREME COURT OF INDIA - Reply By Ganeshan Kalyani - The Reply = Sir the Hon'ble Supreme Court decision is very clear to state that the rate of interest prevailing at the time of payment of tax is applicable. Thanks Sri Kasturi Sir. Sri Vijay Sir I would like to welcome to TMI as you were not seen for some time. Thanks. - Reply By KASTURI SETHI - The Reply = Sh.Ganeshan Kalyani Ji, Sir, Save this judgement for future in the interest of would-be clien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts.After all, the judgement of Supreme Court is law of the land. - Reply By vijay kumar - The Reply = Dear Sirs, Please refer Notification No.13/2016-ST prescribing the effective rate of interest under Section 75. it is clearly mentioned that the Notification comes into effect from the date it receives the assent of the President, which is 14.5.2016. That being the case, the rate of 15% comes into force only from 14.5.2016 and not from an earlier date. The Supreme Court judgements in the case of Suchitra Components 2007 (1) TMI 4 - SUPREME COURT OF INDIA or Mysore Electricals 2006 (11) TMI 202 - SUPREME COURT OF INDIA cannot be read into herein because those cases pertains to operation of a Circular/37B order, which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different from a Notification issued under the provisions of Finance Act. A Notification has to be applied prospectively, unless otherwise expressly provided therein that it is retrospective, as per the following case laws: i) Supreme Court of India Videocon Industries Limited vs UOI - 2015 (2) TMI 735 - SUPREME COURT (v) A Statute which not only changes the procedure but also creates new rights and liabilities, shall be construed to be prospective in operation, unless otherwise provided, either expressly or by necessary implication. ii) 2015 (10) TMI 296 - ALLAHABAD HIGH COUT- Commissioner of Service Tax, Noida Versus M/s Greater Noida Development Authority, Greater Noida Other Citation: 2015 (40) S.T.R. 46 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (All.) Levy of service tax on letting out of vacant land in furtherance of business and commerce - w.e.f. 01.07.2010 or w.e.f. 01.06.2007 - Held that:- The findings of the tribunal in case of NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY Versus COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX [2014 (1) TMI 1203 - CESTAT NEW DELHI] Since the introduction of this sub-clause in Explanation I expands the scope of the taxable service and renders the taxable (a) hitherto non-taxable transaction, and absence of explicit retrospective reach provided to the amendment and insertion of this sub-clause, these transactions covered by this sub-clause of the Explanation have only the prospective operation. iii) 2015 (3) TMI 964 - CESTAT CHENNAI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Other Citation: 2015 (39) S.T.R. 261 (Tri. - Chennai) M/s. Sify Technologies Ltd Versus Commissioner Of Central Excise And Service Tax, LTU Chennai . Therefore, the addition to the Explanation (C) with effect from 10.05.2008 is prospective in nature and that addition shall be applicable from the day that was enacted in the statute book. Accordingly, there shall be no liability to levy of interest on the gross value of taxable service relating to the period prior to that date. - Decided in favour of assessee. NOTIFICATION No. 13/2016-Service Tax New Delhi, the 1st March, 2016 G.S.R.___ (E).- In exercise of the powers conferred by section 75 of the Finance Act, 1994 (32 of 1994) and in supersession of the notification N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 12/2014-Service Tax, dated the 11th July, 2014, published in the Gazette of India, Extraordinary, vide number G.S.R. 482 (E), dated the 11th July, 2014, except as respects things done or omitted to be done before such supersession, the Central Government hereby, for delayed payment of any amount as service tax in the situation mentioned in column (2) of the Table below, fixes the rate of simple interest per annum mentioned in the corresponding entry in the column (3) of the said Table:- 2. This notification shall come into force on the day the Finance Bill, 2016 receives the assent of the President. [F. No. 334/8/2016-TRU] (K. Kalimuthu) Under Secretary to the Government of India - Reply By KASTURI SETHI - The Reply = Sh.V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ijay Kumar Ji, Let us have a discussion in sportsman spirit. You are treading my path which I have left as is evident from above replies by the experts. Earlier, rate of interest was increased vide Notification No.12/14-ST dated 11.7.14 ( effective from 1.10.14). As per TRU-letter dated 10.7.14, with an example higher rate of interest @18% was made applicable for the period from 5.2.13 to 30.9.14 where as effective date was 1.10.14 . Will you call it retrospective effect or prospective effect ? - Reply By vijay kumar - The Reply = Sri Sethi ji, 18% interest was prevalent up to 30.9.2014. From 1.10.2014, the slab rates of 18, 24 and 30 came into force. The TRU letter clearly indicates that upto 30.9.2014 the rate of interest of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18% will apply, being the prevalent rate under the prevalent notification. From the 1.10.2014, the new rate will apply depending upon the period that has elapsed since the due date. Accordingly, the interest notification will have a prospective application only, which has been my stand from the beginning. Thanks and regards. - How to apply new Service Tax Interest Rate ?? - Query Started By: - abbas mukhi Dated:- 19-5-2016 Service Tax - Got 23 Replies - Service Tax - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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