Modes of Service Tax Payment

• Service tax could be paid through internet banking, NEFT, or challan at designated banks.
  
• Online payment was encouraged by the Central Board of Excise and Customs.
  
• Payment was made using GAR-7 challans in physical mode or through the NSDL portal.
  
• E-payment became mandatory for most taxpayers based on turnover.
  
• Cash payments were restricted to very specific and limited scenarios.
  

Mandatory E-Payment Threshold

• Assessees with a service tax payment of ₹1 lakh or more per financial year were required to pay online.
  
• This limit was introduced to reduce manual payments and improve efficiency.
  
• The rule applied to both individual and corporate taxpayers.
  
• Exceptions were allowed only with prior approval from the jurisdictional officer.
  
• This e-payment threshold ensured a structured and traceable tax system.
  

Circumstances Permitting Cash Deposits

• Cash payments were generally allowed only for assessees below the ₹1 lakh limit.
  
• In case of technical failure or lack of access to online banking, manual challan payment was permitted.
  
• Special permission was sometimes granted by the Assistant Commissioner or Superintendent.
  
• Payments in cash were deposited through authorized banks using a printed challan.
  
• Documentation had to be retained for audit and verification purposes.
  

Banking Channels for Physical Payment

• Selected public and private sector banks were authorized to accept physical payments.
  
• The payment had to be made within the due dates to avoid penalty or interest.
  
• A stamped counterfoil from the bank served as proof of payment.
  
• Delays or errors in challan processing could be addressed through the bank or Range Office.
  
• Manual payments were reconciled with department records during audits.
  

Regulatory Instructions and Compliance

• CBEC issued circulars specifying the shift toward digital payments.
  
• Non-compliance with mandatory e-payment rules attracted penal action.
  
• Taxpayers had to monitor their annual liability to determine the applicable mode.
  
• Periodic system upgrades phased out physical payments in favor of online tracking.
  
• The transition aimed to streamline service tax administration and reduce cash handling.