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Service Tax – Records, Audit & Penalties

Every service tax assessee is required to maintain records according to Service Tax rules. The assessee is required to furnish to the Superintendent of Central Excise a list of accounts maintained by him in relation to service tax. This list is to be submitted once at the time of filing the first S.T.3 return. )(e.g. books of account, viz. sales register, purchase register, cash book, petty cash book, general ledger, etc.) Service Tax Invoice - Every person providing taxable service is required to issue (within 14 days of completion of service or receipt of payment towards value of service, whichever is earlier) an invoice, a bill or challan signed by him or a person authorized by him. Such invoice, bill or challan should be serially numbered. Audit Requirement – Certain categories of service tax assesses are required to get audit conducted under service tax as follows:

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Taxpayers with Service Tax payment above Rs.3 crores (Cash + CENVAT) (MANDATORY UNITS) are required to be audited every year. Taxpayers with Service Tax payment between Rs.1 crore and Rs.3 crores (Cash + CENVAT) are required to be audited once every two years. Taxpayers with Service Tax payment between Rs.25 lakhs and Rs.1 crore (Cash + CENVAT) are required to be audited once every five years. Taxpayers with Service Tax payment upto Rs.25 lakhs (Cash + CENVAT) – 2% of taxpayers to be audited every year.

Penalty – The following offences carry a penalty under service tax: • Failure to pay service tax – In addition to the service tax and interest, penalty not less than Rs.100/- for every day during which failure continues, or @ 1% of such tax per month, whichever is higher but shall not exceed 50% of service tax due. • • • • • • • Failure to take registration in accordance with Sec.69 or rules made there-under - Rs. 10000 or Rs. 200 per day during which failure continues, whichever is higher. Failure to keep, maintain or retain records- Up to Rs.10000/Failure to furnish information, to produce documents called for by Central Excise Officer or to appear before the Central Excise Officer- Upto Rs.10000/- or Rs. 200 per day during which failure continues. Failure to pay tax electronically by the person required to pay tax electronically- upto Rs.10000/Failure to issue correct invoice with complete details and account for the invoice in his books of accounts – Upto Rs.10000/For contravention of any other provisions of the Act where no separate penalty is provided- upto Rs.10000/If service tax not been levied or paid or been short-levied or short-paid or erroneously refunded by reason of fraud or collusion or willful mis-statement or suppression of facts or contravention of any of the provisions of chapter V of Finance Act, 1994 or of the rules made there under with intent to evade payment of service tax. • Penalty (in addition to the Service Tax and interest thereon, if any payable) would be the amount equal to the amount of Service tax not levied or paid or short-levied or short paid or erroneously refunded. But where true accounts are available in specified records, the penalty is reduced to 50%. Where the service tax and interest is paid within 30 days, from the date of communication of the order the penalty is 25%. The reduced penalty is available only if the penalty is paid within 30 days of the date of communication of the order. • Late filing of returns – Late fee upto Rs.20000/-

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If Delay is up to 15 days-Rs.500/If Delay is beyond 15 days and upto 30 days-Rs.1000/If Delay is beyond 30 days-Rs.1000/- plus Rs.100 per day of delay beyond 30 days Provided the total amount payable in terms of this rule shall not exceed the amount specified in Sec.70 of the Act.

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