No Need to file Service Tax return (ST-3)when no service is rendered during the relevant period and even
not required to opt for VCES
We are sharing
with you an important judgement of the Hon’ble Kolkata Tribunal in the
case of M/s Suchak Marketing Pvt Ltd Vs. Comm.of Service Tax, Kolkata [2013
(6) TMI 641]and detailed analysis on following issue:
Issue:
WhetherService
provider is required to file Service Tax Return where no service is rendered?
Facts of the
case:
M/s Suchak
Marketing Pvt Ltd (“the Assessee“ or “Suchak”) is registered under the
taxable servicecategory of constructions in respect of commercial or industrial
building and civil structure servicesunder Chapter V of the Finance Act, 1994
(“the Finance Act”).
During the period April, 2005 to March, 2008 the Assessee has not
provided any service and also has not filed Service Tax Return. However the
Assessee filed six “Nil” belated Service tax return for the period September, 2005
to March, 2008 on November 18, 2008.
Thereafter the Department
issued a show cause notice proposing to impose penalty under Rule 7C of the
Service Tax Rules, 1994 (“the STR”)
and Section 77 of the Finance Act. The Adjudicating Authority vide the Order-in-Original
ordered the Assessee to pay Rs. 12,000/-for each ST-3 Return under Rule 7C of
STRfor late filing of Service Tax Return and also imposed penalty of Rs.
2,000/- under Section 77 of the Finance Act.
Subsequently, the
Assessee against the Order-in-Original filed an appeal before the Commissioner
(Appeals). The Commissioner (Appeals) confirmed the late fee of Rs.12, 000/-
under Rule 7C of STR and dropped penalty under Section77 of the Finance Act.
Hence the Assessee
filed the present appeal before the Hon’ble Tribunal challenging levy of late
fee on the ground that it had not provided any services during impugned period
and thus was not required to file service tax return.
Held:
The Hon’ble Tribunal waived penalty under Rule 7C of the STR and set
aside order of the Commissioner (Appeals) relying on the Central Board of
Excise and Customs (“the CBEC”) Circular No.97/8/07-ST dated August 23, 2007
and judgment of the Tribunal in the case of Amrapali Barter (P.) Ltd. Vs. CST[2013-TIOL-32-CESTAT-KOL] (“Amrapali
Barter Case”).
The Hon’ble Tribunal observed that even in
terms of Rule 7C of the STR in case of filing of NIL returns, the Assessing
Officer has discretion to waive late fees for filing of ST-3 returns. Further
the Tribunal observed that this is a fit case to invoke proviso to Rule 7C of
the STR and waived late fees, relevant proviso of Rule 7C of the STR is as
under:
“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.”
The relevant extract of the Circular and Amrapali
Barter Case are as under for the
ease of your reference:
The Circular:
“6. ….Persons who are not liable to pay service tax (because of an
exemption including turnover based exemption), are not required to file ST-3 return.”
In Amrapali Barter Case,the Service provider is registered with the Service Tax
Authorities and has not provided any services during a particular return cycle
and was also not liable to pay any service tax during that return cycle. The
Hon’ble Tribunal has held that the service
provider is not required to file the Service Tax Return (even nil return) for
that period as per the CBEC Circular No 97/8/07-ST dated August 23, 2007. Further the Hon’ble Tribunal held that in case
the Service Provider files the nil return after considerable delay,then also no
penalty under Section 77 of Finance Actor fees under Rule 7C of the STR imposable
on him. Hence such case is fit for
invocation of the proviso to Rule7C and grant waiver of late filing fees.
Related open Query in the light of Service
Tax Voluntary Compliance Encouragement Scheme, 2013 (VCES):
The TRU (CBEC) has issued a recent Circular No. 170/5 /2013 – ST
dated. 08-08-2013 to provide clarification on stated query:
Query: Whether a person, who has paid service tax
for a particular period but failed to file return, can take the benefit of VCES
Scheme so as to avoid payment of penalty for non- filing of return?
Clarification: Under VCES a declaration can be made only in
respect of “tax dues”. A case where no tax is pending, but return has not been
filed, does not come under the ambit of the Scheme. However, Rule 7C of the
Service Tax Rules provides for waiver of penalty in deserving cases where
return has not been filed and, in such cases, the assessee may seek relief
under Rule 7C.
Way forward:
Assessee, who has paid service tax for a particular period but
failed to file service tax return, can be relieved on following ground:
·
Persons who are not liable to pay
service tax (because of an exemption including turnover based exemption), are
not required to file ST-3 return in terms of Circular No.97/8/07-ST dated
August 23, 2007 and cited judgement.
·
Even if service tax return is filed
late/ failed to file return – No Penalty in terms of Rule 7C of the STR.
Something to cheer……..enjoy.
Hope the
information will assist you in your Professional endeavors. In case of any
query/ information, please do not hesitate to write back to us.
Thanks & Best
Regards.
Bimal Jain
FCA, FCS, LLB, B.Com (Hons)
FCA, FCS, LLB, B.Com (Hons)
Released a Book - "Guide to Service Tax Voluntary
Compliance Encouragement Scheme, 2013", authored by Bimal Jain, FCA, FCS,
LLB
Disclaimer: The contents of this document are solely for
informational purpose. It does not constitute professional advice or
recommendation of firm. Neither the authors nor firm and its affiliates accepts
any liabilities for any loss or damage of any kind arising out of any
information in this document nor for any actions taken in reliance thereon.
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