NIL Service Tax Return late filling penalty – BAAP RE BAAP
- Wednesday, April 25, 2012, 8:58
- Service Tax
- Articles
CA Gautam Joshi
Today is the last day for filing Service tax Return for the Half year Ended 31st March 2012. Most of you may have either filed Your or Your Client Service Tax Return or are in process of Filing the same. I would like to remind you of Penalty for late Filing of Service tax Return. Budget 2011-12 
has made many significant changes in Service Tax and also gave emphasize to penal provisions including prosecution.
Section 70 of Finance Act, 1994 reading with Rule 7 of Service Tax Rules, 1994 mandates every service tax payer to file half yearly return within 25 days. If the return is not filed within the time specified then following amount of penalty is levied:
| Day wise default criteria | Penalty Amount (Rs.) |
| < 15 days | 500 Rs. per day |
| > 15 days but < 30 days | 1000 Rs. per day |
| > 30 days | 1000 Rs. fix plus Rs. 100 per day or Rs. 20,000/- maximum |
The same provisions apply for NIL returns i.e. where service has not been provided or received and no service tax has been collected or paid. This seriously invites re-evaluation from charging authorities. Powers are granted to Superintendant that can reduce the amount of penalty in case of NIL returns but only on satisfaction of genuine reasons. However, what is genuine or reasonable ground is subject matter of dispute.
It has been observed that at the time of submission of NIL returns Superintendent first asks to clear the penalty of late filling i.e. maximum in all most all cases instead of at least listening once the genuine reasons of late compliance from tax payers.
Lacuna of the law is in this case penalty is collected higher than tax amount or sometimes even no tax amount. Penalty being a financial charge is collected from the tax payer to bring him on the correct track and not collected to make any unnecessary or counterfeit financial burden. Penalty should kill the evil intentions and not the tax payer himself.
Which are the instances where NIL returns required to be filed?
- When wrong service is registered or added and no surrender of such service is done in time,
- When tax payer stops providing that service and no surrender of such service is done in time,
- When tax payer has just started providing or receiving the service and in first few months no business (either billing or collection) has been done,
- When tax payer shifts to another premises, takes a new registration over there and forgets to surrender the old registered premises etc.
What is the remedy if Superintendent first asks to clear the penalty of late filling and then only accept Service Tax return?
If the return is delayed due to genuine reasons and Superintendent first asks to clear the penalty of late filling then tax payer should register or speed post all 3 copies to Superintendant. He must save copy of return and evidences of register or speed post with him. Registered or Speed post is a valid proof of any documents submission to be made in any government office. Tax payer may get a demand notice asking for penalty of late filling of return which can be then replied with written reasons and documentary evidences. The person seating above the Superintendant (to whom the letter is replied) will at least give an opportunity of being heard to the tax payer to justify his late compliance.
Is new maximum penalty cap of Rs. 20,000/- also applicable for service tax returns not filed for the earlier tax periods or old maximum penalty cap of Rs. 2,000/- will continue?
Penalty of Rs. 20,000/- is in effect from 01.04.2011. However, there is no specific mention by drafting authorities for which tax periods this new maximum penalty cap will be applicable.
According to author’s view, penalty is always charged for the financial year. Currently, penalty is Rs. 20,000/- maximum and so any service tax returns filed on or after 01.04.2011 even for earlier tax periods will attract this new penalty maximum cap of Rs. 20,000/-. However, the same should be clarified by way of departmental circulars.
Related posts:
- Penalty for Late Filing of Service tax Return
- Penalty should not be imposed for if Assessee Paid service tax along with interest and late fee deposited before issue of Show Cause Notice
- S.271(1)(a) of Income-tax Act, 1961 – Penalty for late filing of return
- Calculate Interest U/s. 234A, 234B, 234C; Return Due Date & Consequences of Late Filing
- File your Income Tax return for financial year 2008-2009 before 31st March 2010 to avoid penalty
R/Sir,
Today I read the articled of Service Tax, after reading the matter i am eager to know that whether a agent of Real Estate company comes under the provision of Service Tax act or not ,where his/her gross commission (It is same as net commission because company doesn’t reimburse any expenses.exceed Rs. Ten lacs in a year F.Y.2010-11.
take a example of PACL India Ltd. If This company gives commission more then Rs.Ten Lacs to any of its Agent. Then whether this company is eligible to deduct Service tax of his agent or not.
its a nice or important artical for all those who is professional or corporate agents/advisors.
Is enhanced penalty (ie Rs 20,000)notified?? If yes, please let me know the notification number and details.
Gautam Sir
Its Rs. 500 and 1000 in lumpsum and not per day for delay of upto 15 days and 15-30 days respectivley
Mr.Gautam,
Clerify the amount of Rs. 500 and 1000 in lumpsum and not per day for delay of upto 15 days and 15-30 days respectivley
Gautam,
I would like to bring to your notice that late filing of return attracts “Fees” and and prescribed under Rule 7C of Service Tax Rules and not “Penalty”. Since, “fees” are to be payable for compounding of any offence, such fees have to be payable though there exists a reasonable cause for not filing the return in time. Secondly, this provision of Rs. 20,000 is effective from 08-04-2011 and not from 01-04-2011 and new rate of late filing fees would be applicable for any period of return filed after 08-04-2011.
6.1 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’. This return is required to be filed on a half yearly basis, in Form ST-3. For the periods from April to September and October to March, it must be filed by the 25th October and the 25th April respectively. Further, ‘Input Service Distributor’ is also required to file this return. 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. pls see circular no 97 dated 23/08/2007, in para 6.1,
If someone has charged my service tax and i have a service tax registrations number but my turnover does not exceed 10 lakhs. Then is it necessary that my return reflects the service tax amount charged to me ?
Dear Sirs,
I ahve registered for Stax in dec 2009 & my business billing started in Feb2010 & going on till now,, My total turnover is under 3-4 lacs for 2010-2011 & 5-6 lacs 2011-12 only. But i have collected servie tax from few companies unknowingly & not filed any return till now… Now i am afraid that, will be be charged Rs.20000/- x 4 times for half yearly 2010-2012??? Or should i pay 2000/- x 4 half’s for 2010-2011 & 2012 because it is before penalty hiked to 20000/- . Pls advice me to get rid of this situation…Thanks in Advance.. Sridhar
Sir,I had a registered properitorship company during 2003 and applied for service tax, however due to termination of business due to losses i closed all activities and the service tax was paid for the period i worked. Later on this went out of mind and no action taken either by me or department and now i recieved a notice for non filing. i met the officer and he said that 2011 and 12 you file online the Nil Return, Then you will get show cause notice for previous years and i need to pay 20000 each from 2006 to 2011. (total 10 returns penalty of Rs.200000)
or he said i can file all manual return back dated and pay them a bribe and they will close the file the bribe amount is very high. Now i have not done a turn over of more that 4 lacs in this company and now if they ask me to pay 200000 or bribe i am really under pressure. Can you please help
Respected sir,
I have registered for Stax in nov 2009 & I have not filed s.tax return for the year 2009-10 & 2010-11 for purpose of nil tax liablity. please confirm for, am i liablie for penalty for non filing of nil s.tax return, but tax is nil.
rajesh