If no service is rendered by service provider, there is no requirement to file ST-3 Returns

[2013] 35 taxmann.com 360 (Kolkata – CESTAT) CESTAT, KOLKATA BENCH, Suchak Marketing (P.) Ltd.

v.

Commissioner of Service Tax, Kolkata* Dr. D.M. Misra, JUDICIAL MEMBER

Order No. A/24 (KOL.) of 2013, Appeal No. ST/393 of 2012, FEBRUARY 5, 2013

Section 70 of the Finance Act, 1994 read with rule 7C of the Service Tax Rules, 1994 – Furnishing of returns – Assessee, a construction service provider, having registration under service tax, filed six NIL returns in Form ST-3 form for April, 2005 to March, 2008 on 18-11-
2008 – Department sought levy of late fees under rule 7C of the Service Tax rules, 1994 and penalty under section 77 of the Finance Act, 1994 for such belated filing – Commissioner (Appeals) upheld levy of fees under rule 7C, but, dropped penalty – Assessee challenged levy of fees on ground that it had not provided any services during impugned period and it was not required to file any return – HELD : As per Circular No. 97/8/07-ST, dated 23-8-2007, if no service is rendered by service provider, there is no requirement to file ST-3 Returns – Further, even as per rule 7C, in case of filing of NIL returns, Assessing Officer has discretion to waive late fees for filing ST-3 returns and this is a fit case to invoke proviso to rule 7C and waive late fees – Hence, late fees levied under rule 7C ibid was set aside [Para 5] [In favour of assessee]

Circulars and Notifications : Circular No. 97/8/07-ST, dated 23-8-2007

EDITOR’S NOTE

1. Circular : As per para 6 of the Circular No. 97/8/07-ST, dated 23-8-2007, —

		The Service Tax return is required to be filed under section 70 of the Act read with rule 7 of the Rules, by ‘any person liable to pay the Service Tax’.
		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.

2. Sections 69 and 70 of Finance Act, 1994, Rule 7C of Service Tax Rules, 1994 and Rule 9 of CENVAT Credit Rules, 2004 : The view expressed in circular is unexceptionable, but, that would not mean that a person, who is liable to pay service tax but has NIL service tax payable during a particular period, would stand absolved from this requirement. Form ST-3 is also required to be filed under rule 9 of the CENVAT Credit Rules, 2004 specifying Cenvat credit balance/details.

Even section 69 dealing with registration, makes every person liable to pay service tax to seek registration. Rule 4 of the Service Tax Rules, 1994 provides for surrender of registration certificate when the person liable to pay service tax ceases to be so liable. Therefore, registration certificate must be surrendered when a person doesn’t expect himself to be liable to pay service tax anymore or at least, for a long duration.

Even if no services have been provided during a particular half-year, every person liable to pay service has to submit a return. Owing to NIL services provided, the return shall be NIL return. However, it may contain other details as regards CENVAT Credit taken, services received under reverse charge, etc.

If a person continues to have Cenvat balance, the Department expects filing of return under rule 9 of CENVAT credit Rules, 2004. Probably, the matter was not argued from that angle.

The fact that proviso to rule 7C provides for waiver of late fees in case of NIL return, also proves that law foresees filing of NIL return; otherwise the provisions of rule 7C would be rendered, rather, otiose.

The assessees should be cautious and should not blindly take shelter of this judgment.

CASES REFERRED TO

Amrapali Barter (P.) Ltd. v. CST [Order Nos. A-879-880 (Kol.) of 2012, dated 14-12-2012] (para 5).

A.K. Biswas for the Appellant.

ORDER

1. This is an appeal filed by the appellant against the Order-in-Appeal No. 146/ST/Kol/2012 dated 7-5-2012 passed by Commr. of Central Excise (Appeals), Kolkata.

2. Briefly stated facts of the case are that the appellants are engaged in providing the taxable services under the category of construction in respect of commercial or industrial building and civil structure services. For rendering the said services, the appellants were registered with the service tax Department. The appellants had filed six nil returns in ST-3 form for the period from September, 2005 to March, 2008 on 18-11-2008. Consequently, 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 penalty of Rs. 2,000/- under Section 77 of the Finance Act, 1994 against the appellant. Aggrieved by the same, the appellant had filed appeals before the ld. Commissioner (Appeals). The ld. Commissioner (Appeals) dropped the penalty under Section 77 of the Finance Act, but confirmed the penalty of Rs.12,000/- against the appellant under Rule 7C of Service Tax Rules. Hence the present appeal.

3. None present for the appellant in spite of notice of hearing having been sent to them well in advance.

4. The ld. A. R. appearing for the Department, has reiterated the findings of the Id. Commissioner (Appeals) and submitted that the ld. Commissioner (Appeals) has already dropped the penalty under Section 77 of the Finance Act, 1994. Therefore, there is no reason to waive the late fees directed to be paid under Rule 7C of the Service Tax Rules, 1994.

5. Heard the Id. A.R. for the Department and perused the records. Undisputedly, the appellants were registered with the service tax Department for providing taxable services. It is also not in dispute that during the period April, 2005 to March, 2008, they have not provided any service and also they have not filed any returns with the Department. They have filed six ST-3 Returns belatedly on 18-11-2008. I find that in view of the Board’s Circular No.97/8/07-ST, dated 23-08-2007, in the event, no service is rendered by the service provider, there is no requirement to file ST-3 Returns. The ld. A.R. could not produce anything contrary to the said Circular. Besides, I find that as per Rule 7C of the Service Tax Rules, in the event, nil returns are filed, the Assessing Officer had the discretion to waive the late fees for filing the ST-3 Returns. In my view, it is a fit case to invoke the proviso to Rule 7C and waive the late fees relating to the nil returns filed by the appellant during the period April, 2005 to March, 2008. A similar view has been held by this Tribunal in the case of Amrapali Barter (P.) Ltd. v. CST [Order No.A-879-880/Kol/2012, dated 14-12-2012]. In these circumstances, the order of the ld. Commissioner (Appeals) is set aside and the appeal filed by the appellants is hereby allowed. Appeal is allowed.

*In favour of assessee.



We Suggest – The assessee should continue to file nil returns to avoid notices from tax department. Its always better to be safe and comply.