Rule 6 of the Service Tax Rules, 1994, which pertains to payment of service tax provides that, in a case where an assessee is an individual or a proprietary or a partnership firm, the service tax on the value of the taxable services received during any quarter shall be required to pay the service tax. The challan to be used isTR-6.

In case of the other categories of assessees, the tax has be paid by 25th of the month immediately following the said calendar month.

In case of non-payment of tax, heavy penalties and interest have been prescribed:

(a) Interest: If an assessee fails to pay the service tax, he is required to pay simple interest @ 1.5 per cent for every month or part of a month by which the payment of the tax or any apart thereof is delayed.

(b) Penalty: If an assessee fails to pay service tax on time, he shall be liable to pay a penalty of Rs 100 which may extend to Rs 200 per day during which such failure continues, besides paying the actual service tax and interest thereon.

(c) Penalty for suppressing the value of taxable service: If an assessee is found concealing or suppressing the value of taxable service or has furnished inaccurate value such person shall be penalised a sum up to twice the amount of service tax sought to be evaded by reasons of suppression or concealment,etc.

(d) Filing of return: All categories of service tax assessees shall be required to submit a half-yearly return in the form NO ST-3 for the months covered. For October 1998 to March 1999, the assessees will be required to file the return by the 25th of the month following the particular half year.

Penalty for failure to file the return

If a person fails to furnish the half-yearly return, he shall be penalised a sum of Rs 100 extendable to Rs 200 for every week during which the failure continues.

An important question of whether the tax will be payable on fees received on or after the date of first effect like October 16, 1998, in respect of services rendered before that date and bills raised up to October 15, 1998, has been raised frequently. The solution has been clarified by the authorities in context of services rendered by architects.

``An issue has been raised as regards the basis on which the determination of the service tax liability on the ongoing projects (on the date ofservice tax coming into effect) is to be made. In this regard, it is clarified that service tax is payable only in respect of service tax rendered on or after the date on which the service tax provisions come into force. Service tax is not required to be paid on payments received for the services rendered prior to the service tax being notified.''

The above can hopefully be applied to other services also. Hence in case of services rendered before the date of effect--October 16, 1998--no service tax will be applicable.

Thus, it is advised that the above people engaged in the services should charge and deposit the service tax by the due date and file the return on time to escape the heavy penalties.

The Jindals are Delhi-based chartered accountants.