Service tax issue

Queries 1526 views 2 replies

Shrawan

CA & CS

112 Points Joined March 2010

one of my client (soleproprietorship firm) is in transport business owning 4-5 trucks. It got Service Tax registration for Goods transport agency service on 01.06.2007. Its main service is to provide trucks to transport contractors (who are generally companies & they actually took transport contracts from companies through tenders) in which my client is not liable to pay service tax as the consignor or consignee who is liable to pay freight is liable to pay service tax. Its didn't provide any taxable service since then. Whatever service provided was exempted by notification. It didn’t file any service tax return as there is no tax liability on his part during the said period. Now, the assessee has received a notice from Service Tax dept. that being a registered assessee it need to file return from April, 2008 to march, 2013. They mentioned to comply with the provisions of sec 69 i.e. file return being a registered asseessee otherwise they will initiate penal action. i need to know what should we do in this case. Should we need to file return for the period mentioned in notice i.e. April, 2008 to march, 2013. Or can it take the benefit of Circular No.97/8/07-ST dated August 23, 2007 in which it is said that ” 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”. If it file return then again issue will be to pay late fees & penalty?? Please suggest how to proceed in this case.

Replies (2)

Deepak Gupta

CA Student

15927 Points Joined May 2011

As per the FAQs booklet issued by the department, Para 4.9 (Page 18) says that, “Filing of return within the prescribed time limit is compulsory, even if it may be a nil return, failing which penal action is attracted.” (Link of Booklet)
.
You cannot take the benefit of VCES scheme.

As per issue No. 7 mentioned in Circular No. 170/5/2013 – ST, dated 08.08.2013, 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.
.
Your observation was also confirmed in the case of M/s. Suchak Marketing Pvt. Ltd. Vs CCE, Kolkata (2013-TIOL-963-CESTAT-KOL)

[In this case, the appellants are engaged in providing the taxable services under the category of ‘construction in respect of commercial or industrial building and civil structure’. The Appellants had filed six ‘NIL’ returns in ST 3 form for the period from September 2005 to March 2008 on 18.11.2008. A Show Cause Notice was issued to them proposing penalty under Rule 7C of the Service tax Rules, 1994 and Section 77 of the Finance Act, 1994. The adjudicating authority directed the appellants to pay Rs. 12,000/- for each ST-3 return and also imposed a penalty of Rs. 2000/- against the appellant. Aggrieved by the same, an appeal was filed with the CCE (Appeals) who dropped the penalty under Section 77 but confirmed the other penalty. The Tribunal while setting aside the order of the CCE (Appeals) held that the case is squarely covered by the judgement of M/s Amrapali Barter Pvt. Ltd. & M/s Vijay Laxmi Promoters Pvt. Ltd. V. Commr. of Service Tax, Kolkata bearing its Order No. A-879-880/Kol/2012 dated 14.12.2012. Reference was also made to Circular No.97/8/07-ST dated 23.08.2007, wherein it was stated that in the event, no service is rendered by the service provider, there is no requirement to file ST-3 Returns. Thus, the order was set aside and the appeal allowed.]
.
So, I think you should file nil returns because FAQs released by the department clearly says that, nil return should be filed. Later, the department may initiate penalty proceedings, then you may seek waiver of the same.