Maximum penalty for filing tax returns late is Rs.20,000

What is the penalty for the late filing service tax half-yearly returns?
—Devang Patel
Section 70 of the Finance Act 1994 provides that every person liable to pay the service tax shall himself assess the tax due on the services provided by him and shall furnish it to the Superintendent of Central excise, a return in such form and in such manner and such frequency and with such late fees not exceeding Rs.20,000 for delayed furnishing of return as may be prescribed. Prior to April 08, 2011, the maximum penalty was Rs.2,000, instead of Rs.20,000 which is now prescribed.
Rule 7C of the service tax rules prescribes, where the return prescribed under Rule 7 is furnished after the date prescribed for submission of such return, the person liable to furnish the said return shall pay to the credit of the Central Government, for the period of delay of:
(i) fifteen days from the date prescribed for submission of such return, an amount of Rs.500;
(ii) beyond fifteen days, but not later than thirty days from the date prescribed for submission of such return, an amount of Rs.1,000; and
(iii) beyond thirty days from the date prescribed for submission of such return an amount of Rs.1,000 plus Rs.100 for every day from the 31st day till the date of furnishing the said return:
Provided that the total amount payable in terms of this rule, for delayed submission of return, shall not exceed the amount specified in Section 70 of the Act:
Provided further that where the assessee has paid the amount as prescribed under this rule for delayed submission of return, the proceedings, if any, in case of such delayed submission of return shall be deemed to be concluded.
[Provided also that where the gross amount of service tax payable is nil, the Central Excise officer may, on being satisfied that there is sufficient reason for not filing the return, reduce or waive the penalty.]
Explanation: It is hereby declared that any pending proceedings under Section 77 for delayed submission or non-submission of return that has been initiated before the date on which the Finance Bill, 2007 receives the assent of the President, shall also be deemed to be concluded if the amount specified for delay in furnishing the return is paid by the assessee within 60 days from the date of assent to the said Finance Bill.
Based on the above rules, the minimum penalty will be Rs.500 for a delay of 15 days from the due date of filing of service tax return, which is April 25 for the half year ended from October to March and October 25 for the half year ended April to September, Rs.1,000 for a delay of beyond 15 days to 30 days and beyond 30 days it will be Rs.1,000 + Rs.100 per day till the date of furnishing the return with a maximum penalty of Rs.20,000 per return.