To,
The Suprintendent
Range – , Division –
Ahmedabad
Subject: Non Filing of ST-3 Return : Transport of Goods by Road Service
Dear Sir,
With reference to your letter No.*******************, kindly note that we are proving service as transport of goods by road hence we are falling under category of GTA (Goods Transport Agency).
As per your good office letter you have mentioned that we are required to fill the ST-3 return quarterly. However, I would like to draw your honour’s attention to Rule 2(1)(d) which states about “person liable for paying service tax”. Extract of Clause (v) of Rule 2(1)(d) is as follows:
“ (v) In relation to taxable service provided by a goods transport agency, where the consignor or consignee of goods is,-
(a) Any factory registered under or governed by the Factories Act, 1948(63 of 1948)
(b) Any company formed or registered under the Companies Act, 1956 (1 of 1956)
(c) Any corporation established by or under any law
(d) Any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India
(e) Any co-operative society established by or under any law
(f) Any dealer of excisable goods, who is registered under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder or
(g) Any body corporate established, or a partnership firm registered, by or under any law,
Any person who pays or is liable to pay freight either himself or through his agent for the transportation of such goods by road in a carriage; “
Thus on plain reading of the above extract of the rules which are also attached herewith, your honour can see the intention of law. Sub clause (a) to (g) are defining various types of specific assessee whereas the concluding portion talks about the rest i.e. any person who is liable to pay freight which is either the consignor or consignee will become the ‘person liable for paying service tax’. Thus such person will have to file st-3 and pay the necessary service tax. The same has been clarified in the new reverse charge mechanism also where 100% liability to pay service tax lies on the service receiver in case of transport of goods by road.
Section 70 gives details regarding furnishing of return. An overview of Section 70(1) talks about every person liable to pay the service tax shall himself assess the tax due on the services provided by him and shall furnish to the superintendent of central excise, a return in such form and manner. However, with the above said explanation and concluding line of Rule 2(1)(d)(v) it is clear that the assessee is not a person liable to pay service tax. Just because he is registered with the department, he does not become a person who is to file return. Primarily he is not liable to pay service tax and also has turnover lower than specified limit (which gives assessee turnover based exemption). Considering the reading of Circular 97 dated 23/08/2007, which talks about person who if not liable to pay service tax (because of an exemption including turnover based exemption), are not required to file ST-3, it is clear that the assessee is a person not liable to pay tax and also enjoys turnover based exemption and thus does not fall under ambit of Section 70 which talks about furnishing of returns.
The aforementioned assessee merely got himself registered inspite of lower turnover than the specified limit, as he had some opportunity from a multinational company of getting huge amount of work for which he needed to have a registration number. The deal eventually did not work out. Thus considering the assessee’s situation and the low amount of work, he did not file his service tax return which would have added additional liability of administrative and legal expenditure. * There is thus no loss to the Government as tax liability of assessee is ‘nil’ and considering the liberal interpretation of law, no act would want any undue pressure on the assessee to file returns even if they are nil merely because they have registered themselves. If the assessee would not have got opportunity of multinational work, he would not have registered considering his low turnover and ‘nil’ liability to pay service tax. Thus such law would cause immense hardship on the assessee and so due to the reason of ‘nil’ liability of payment of service tax and other above mentioned provisions, the assessee has not filed ST-3.
However 3rd proviso to Rule 7C states that officer has power to reduce or waive penalty if there is sufficient reason for not filing the return.
Thus as per the above mentioned reasons and with help of rules, we hope that your honour finds them sufficient for not levying any penalty regarding non-filing of ST-3.
Thus your honour is requested to not levy any penalty for the same and oblige.
Thanking you,
CAclubindia
