34.    Default Surcharge.–

        (1)    Notwithstanding the provisions of section 11, if a registered person does not pay the tax due or any part thereof, whether wilfully or otherwise, in time or in the manner specified under this Act, rules or notifications issued thereunder or claims a tax credit, refund or makes an adjustment which is not admissible to him, or incorrectly applies the rate of zero per cent to supplies made by him, he shall, in addition to the tax due, pay default surcharge at the rate mentioned below:—

                (a)    for the first six months of default, the person liable to pay any amount of tax or charge or the amount

                        of refund erroneously made, shall pay default surcharge at the rate of one per cent per month, of the

                        amount of tax due or the amount of refund erroneously made;

 

                (b)    from the seventh month onwards, the person liable to pay any amount of tax or charge or the amount

                        of refund erroneously made, shall pay default surcharge at the rate of one and a half per cent per

                        month, of the amount of tax due or the amount of refund erroneously made, till such time the entire

                        liability including the amount of default surcharge is paid; and

 

                (c)    in case, the default is on account of tax fraud, the person who has committed tax fraud shall pay

                        default surcharge at the rate of two per cent per month, of the amount of tax evaded or the amount of

                        refund fraudulently claimed, till such time the entire liability including the amount of default surcharge

                        is paid.

 

        (2)    For the purpose of calculation of default surcharge,—

 

                (a)    in the case of inadmissible input tax credit or refund, the period of default shall be reckoned from the

                        date of adjustment of such credit or, as the case may be, refund is received; and

 

                (b)    in the case of non-payment of tax or part thereof, the period of default shall be reckoned from the

                        16^th day of a month (following the due date of the tax period to which the default relates) to the day

                        preceding the date on which the tax due is actually paid.

Explanation.— For the purpose of this section tax due does not include the amount of penalty.