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Q. > Please Help: delayed payment of service tax
If a company has say 300 crore cenvat balance but does not discharge monthly liability of say 20 crores and decducts 240 crores at the end of the financial year leaving 60 crore as balance, in the end of financial year , does interest liability arise for delayed payments?
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Comments
Chetan Agrawal
15-Oct-2011 , 03:47:31 pmRule 6(1) of the Service tax rules, 1994 provides that Service tax shall be deposited by a company 5th (6th in case of electronic payment) of the month following the month in which service is deemed to be provided. Such payment of tax can be made in cash or utilizing Cenvat credit. Rule 3(4) of the Cenvat credit rules, 2004 provides that Cenvat credit can be utilized for payment of Service tax or Excise duty. Further, it is aslo provided that such credit can be utilised only to the extent it is available at the end of the month. In case cenvat credit is utilised for making payment of monthly liabilty then the same is to be reported in the half yearly return to be submitted with the department. Thus, to make payment utizing Cenvat credit, is just a mode of payment. Payment, in any mode should be made within the prescribed time limit. In your case, if you have not made monthly payment even if utilizing the Cenvat credit then interest will be payable. Presently, rate of interest is 18% pa. however, in case of small service providers whose value of taxable services in any financial year did not exceed Rs. 60 lakhs, will be 15%. Further, it should also be ensured that at the end of each month their is sufficient cenvat credit in your account to cover the output tax liabilty.
Ashish Karundia
15-Oct-2011 , 09:34:54 pmRightly said by Chetan
Unmesh
02-Nov-2011 , 12:50:29 amOne point need to be understand here, which is evident from the query that half yearly return is not being filed by the company in the given case, so it means we can file the belated return with penalty of delayed return and showing proper utilization of cenvat credit in cenvet credit register, then no one can prove that you have not utilized the credit on time and has to pay interest, so theoretically interest has to pay but practically it can be saved.