Power to grant exemption from Service Tax
If the Central Government is satisfied that it is necessary public interest so to do, it may, by notification in Official Gazette, exempt generally or subject to such conditions as may be specified in the notification, any service of any specified description from the whole or part of the service tax leviable thereon.
If the Central Government is satisfied that it is necessary in the public interest so to do, it may by special order in each case, exempt any taxable service of any specific description from the payment of whole or any part of the service tax leviable thereon, under circumstances of exceptional nature to be stated in such order.
Power to make rules
The Central Government may, by notification in the Official Gazette, make rules for carrying out the provisions of levying service tax.
Procedures & Assessment
Every person liable to pay the Service Tax must, within the prescribed time and in the prescribed manner and form make an application for obtaining service tax registration number to the Superintendent of Central Excise having jurisdiction over him.
Furnishing of Returns
Every person Iiable to pay service tax shall himself assess the tax due on the services provided by him and shall furnish to the Superintendent of Central Excise , a return in the prescribed form and prescribed manner at the prescribed frequency.
The Superintendent of Central Excise may, on the basis of the information contained in the return, verify the correctness of the tax assessed by the assessee on the services provided.
The Superintendent of Central Excise may require the assessee to produce any accounts, documents or other evidence as he may deem necessary for verification as and when required.
The Superintendent of Central Excise, after considering such accounts, documents or other evidence, and after taking into account any relevant material which he has gathered, if he is of the opinion that service tax has escaped assessment or has been under-assessed, he may refer the matter to the Assistant Commissioner of Central Excise (ACCE) or, as the case may be, Deputy Commissioner of Central Excise (DCCE), who may pass such order of assessment as he thinks fit.
Best Judgement Assessment
In case :-
• Any person fails to file a return of service tax within the prescribed time limit ; or
• Any person who having filed a return fails to comply with the terms of a notice ; or
• The ACCE / DCCE is not satisfied with the correctness or the completeness of the accounts of assessee,
the ACCE / DCCE may, after taking into account all the relevant material which he has gathered, by an order in writing, make the assessment of the value of taxable service to the best of his judgment and determine the sum payable by the assessee or refundable to the assessee.
Value of Taxable Services escaping assessment
In case the ACCE / DCCE :-
• has reason to believe that by reason of commission or failure on the part of the assessee to file a service tax return for any period or to disclose wholly and truly all material facts necessary for his assessment for any period, the value of taxable service for that period has escaped assessment or has been under-assessed or service tax has not been paid or has been short paid or any sum has been erroneously refunded; or
• Notwithstanding that there has been no omission or failure as mentioned above on the part of the assessee, the ACCE / DCCE has, in consequence of information in his possession, reason to believe that the value of any taxable service assessable in any period has escaped assessment or has been under-assessed or service tax has not been paid or has been short paid,
he may in cases falling under point (a) above , at any time within five years, and in cases falling under point (b) above, at any time within one year from the relevant date, serve a notice on the person chargeable with service tax which has escaped assessment or has been under assessed or has not been paid or has been short paid or to any person to whom any sum has been erroneously refunded, requiring him to pay the amount specified in the notice.
The ACCE / DCCE shall, after considering the representation, if any, made by the person on whom notice is served, determine the amount of service tax due from such person ( not being in excess of the amount specified in the notice ) and thereupon such person shall pay the amount so determined.
For this purpose, relevant date means :-
i. in the case of taxable service in respect of which service tax has escaped assessment or has been under-assessed or has not been paid or has been short paid :-
a. where a periodical return has to be filed by the assessee, the date on which the return is so filed
b. where no such return has been filed, the last day by which the return was to be filed
c. in any other case, the date on which service tax is to be paid
i. in a case where the service tax has been provisionally assessed, the date of adjustment of service tax after the final assessment
ii. in a case where any sum, relating to service tax, has erroneously been refunded, the date of such refund
Where the service of the notice is stayed by an order of a Court, the period of such stay shall be excluded in computing the aforesaid periods of five years or six months, as the case may be.
Rectification of Mistake
The ACCE / DCCE who has passed any order may amend any mistake apparent from the records within two years of the date of order. Such rectification or amendment may be done of his own motion or on bringing to his notice of the error by the assessee or the Commissioner of Central Excise or the CCE (Appeals).
In case any matter has been considered and decided in any appeal or revision proceeding, the ACCE / DCCE may amend the order ( which was the subject matter of the appeal or revision ) as aforesaid in respect of all matters other than matters which have been considered and decided in the appeal or revision.
However, in no case can the ACCE / DCCE amend any order which has the effect of enhancing the assessment or reducing a refund or otherwise increasing the liability of the assessee without giving the assessee an opportunity of being heard and making a representation.
All amendments by the CEO must be in writing and must give reasons for the amendment.
In case any amendment has the effect of enhancing the assessment or reducing a refund, the CEO must specify the sum payable by the assessee. Alternatively, if any refund is found due, the CEO must issue refund order.
Revisions & Appeals
Revision of orders by the Commissioner of Central Excise
The Commissioner of Central Excise may call for the records of a proceeding which has been taken by any ACCE / DCCE subordinate to him and make such inquiry or cause such inquiry to be made and pass such order thereon as he thinks fit.
No order which is prejudicial to the assessee shall be passed under this section unless the assessee has been given an opportunity of being heard.
The Commissioner of Central Excise shall communicate the order passed by him to the assessee, the ACCE / DCCE and the Board.
No order under this section shall be passed by the Commissioner of Central Excise in respect of any matter if an appeal against such matter pending before the Commissioner of Central Excise (Appeals).
No order under this section shall be passed after the expiry of two years from the date on which the order sought to be revised has been passed.
Appeals to the Commissioner of Central Excise (Appeals)
Any person aggrieved by any assessment order passed the ACCE / DCCE or denying his liability to be assessed under the service tax, or by an order levying Interest or penalty, may appeal to the Commissioner of Central Excise (Appeals).
Every appeal must be in the prescribed form and must be verified in the prescribed manner. An appeal must be presented within three months from the date of receipt of the decision or order of the ACCE / DCCE, relating to service tax, interest or penalty.
However, the Commissioner of Central Excise (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within aforesaid period of three months, allow it to be presented within a further period of three months.
The Commissioner of Central Excise (Appeals) shall hear and determine the appeal and, pass such order as he thinks fit and such orders may include an order enhancing the service tax, interest or penalty.
However, any order which enhances the service tax, interest or penalty shall not be made unless the person affected thereby has been given a reasonable opportunity of showing cause against such enhancement.
Appeals to Appellate Tribunal
Any assessee aggrieved by an order passed by Commissioner of Central Excise or an order passed by a Commissioner of Central Excise (Appeals), may appeal to the Appellate Tribunal against such order.
Similarly, the Board may if it objects to any order passed by the Commissioner of Central Excise, or the Commissioner of Central Excise may, if he objects to a order passed by the Commissioner of Central Excise (Appeals) direct the ACCE / DCCE to appeal to the Appellate Tribunal against the order.
Every such appeal must be filed within three months of the date on which the order sought to be appealed against is received by the assessee or the Board or by the Commissioner of Central Excise, as the case may be.
The CCE / ACCE / DCCE or the assessee, as the case may be, on receipt of a notice that an appeal has been filed by the other party to the Tribunal, may, within 45 days of the receipt of the notice, file a memorandum of cross-objections, verified in the prescribed manner, and such memorandum shall be disposed of by the Appellate Tribunal as if it were an appeal.
The Appellate Tribunal may admit an appeal or permit the filing of a memorandum of cross-objections after the expiry of the prescribed time if it is satisfied that there was sufficient cause for not presenting it within the said period.
An appeal to the Appellate Tribunal must be in the prescribed form (Form ST-5 and ST-6) and must be verified in the prescribed manner and must, except in the case of Departmental appeals or memorandums of cross-objections be accompanied by a fee of two hundred rupees.
Interest & Penalties
Interest on delayed payment of Service Tax
Every person Iiable to pay service tax who fails to pay the tax or any part thereof to the Central Government within the prescribed time period, must pay simple interest at the rate of 15 % p.a.
Penalty for failure of registration
Every person who is liable to pay service tax but fails to make an application for registration shall be liable to penalty of Rs.500/-
Penalty for failure to pay Service Tax
Any person Iiable to pay service tax who fails to pay the service tax due or interest thereon, is also liable to a penalty of not less than Rs.100/- one but which may extend to Rs. 200/- for each day during which such failure continues, so, however, that the penalty shall not exceed the amount of service tax that he has failed to pay.
Penalty for failure to furnish prescribed return
If a person fails to furnish within the prescribed time limits a service tax return which he is required to furnish, he shall be liable to a penalty which may extend to penalty of an amount not exceeding Rs. 1000/-.
Penalty for suppressing value of taxable service
If the ACCE / DCCE in the course of any proceedings is satisfied that any person has, with intent to evade payment of service tax, suppressed or concealed the value of taxable service or has furnished inaccurate value of such taxable service, he may direct that such person shall pay by way of penalty, in addition to service tax and interest, if any, payable by him, a sum which shall not be less than, but which shall not exceed twice, the amount of service tax sought to be evaded.
However, if the value of concealed or suppressed taxable service ( as determined by the ACCE / DCCE on assessment ) exceeds Rs. 200000/-, the ACCE / DCCE shall not issue any direction for payment by way of penalty without the previous approval of the Commissioner of Central Excise.
Accordingly, the minimum penalty is 100 per cent of the service tax evaded or sought to be evaded and maximum penalty is 200 per cent or twice the service tax sought to be evaded.
Penalty for failure to comply with notice
If the ACCE / DCCE in the course of any proceedings is satisfied that any person has failed to comply with a notice, he may direct that such person shall pay a penalty, in addition to the tax and interest payable, a sum which shall not be less than ten per cent but which shall not exceed fifty per cent if the amount of the service tax, if any, which would have been avoided if the value of taxable service stated in the return by such person had been accepted as the correct value of taxable service.
Penalty not to be imposed in certain cases
No penalty shall be imposable on the assessee for any failure under the service tax laws, if the assessee proves that there was reasonable cause for the said failure.
Offences by Companies
Where an offence has been committed by a company, every person who at the time the offence was committed was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be Iiable to be proceeded against and punished accordingly.
However, no such person shall be liable to any punishment if he proves that the offence was committed without his knowledge and that he had exercised all due diligence to prevent the commission of such offence.
Where an offence has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be Iiable to be proceeded against and punished accordingly.
Company means any body corporate and includes a firm or other association of individuals such as a partnership firm.
Director, in relation to a firm, means a partner in the firm.
Power to search premises
If the Commissioner of Central Excise has reason to believe that any documents or books or things which in his opinion will be useful for or relevant to any proceeding for the purpose of Service Tax are secreted in any place, he may authorize any ACCE / DCCE to search for and seize or may himself search for and seize such documents or books or things.
The provisions of the Code of Criminal Procedure, 1973, relating to searches, shall, so far as may be, apply to searches under this section as they apply to searches under that Code.