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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?

1. When wrong service is registered or added and no surrender of such service is done in time,

2. When tax payer stops providing that service and no surrender of such service is done in time,

3. 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,

4. 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.

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  1. v says:

    (i) fifteen days from the date prescribed for sub
    mission of such return, an amount of five hundred
    (ii) beyond fifteen days but not later than thirt
    y days from the date prescribed for submission of
    such return, an amount of one thousand rup
    ees; and
    (iii) beyond thirty days from the date prescrib
    ed for submission of such return an amount of one
    thousand rupees plus one hundred rupees for
    every day from the thirty first day till the date
    of furnishing the said return:

  2. manasa says:

    There are no provisions to waive or reduce late fee, even in cases of nil returns. Late fee is a mandatory amount payable for delay in filing return. Demand notice is not warranted. However, if late fee not paid or returns not filed the dept. can issue scn demanding late fee along with penalty under section 77(2). Only this penalty can be waived in case of nil return. In other situations where a person is availing small scale exemption and is not required to file any return, even late fee can be deemed to be waived. It is my opinion. Please respond.


  3. Satyanarayana Murthy says:

    As per my understanding export of services is exempt from levy of service tax….in such cases also do I need to take a registration and file nil returns?

  4. akshay says:

    I have filed return but the same has been rejected due to wrong premises code then i have filed the return when i come to know after one month. Weather departement impose penalty for late filling the return.

  5. Emmanuel says:

    How do i treat a Taxpayer who submit a nil Tax return and later found to have reported income and claimed expenses?

    How do i treat expenses of a Taxpayer who initialy submitted a nil return?

  6. Rajesh Kumar Arora says:

    I have filed return but the same has been rejected due to wrong premises code then i have filed the return when i come to know after one month. Weather departement impose penalty for late filling the return.

  7. Prabhu says:


    i have registered in from 2008 but filed upto Sep 2011 and October 2011 to till date payment not made. but now service tax from April-2012 to till date if payment any problem for me. because sum employer asked for ST Challans.

  8. A D SHAH says:

    dear sir
    i have filed st return of 03-2012 online which is online return. but there is one mistake, the return is saved on service tax website but not submitted, is penalty imposed or not ?

  9. K. singh says:

    I have an issue with Ser. Tax. regarding filing on line, I got problem in 2010 to upload my return that the password was not being accepted. However at that time temp. P.W. was issued and tested it and it worked. But when the time I was to upload my return I again experience the same problem of not allowing to accept more than 6 character of P.W. The aces web site advice to contact the range to get again the temp. PW. It is now 2012 The range 4 fail to help this assessee. Last week I was able to make contact and they were not willing to send temp. P.W. wishes the assessee to go to their office at Nehru pLACE . BEING oLD AND handicapped, pleaded with the person on the other line, who has the time to give me a lecture of wasting his time and if everyone started asking for temp. P.W ,ask me to imagine the chaos in his dept. and suggested to send someone to their office which is quite a distance from me, and I have no  help that I can sent. Having 1 rented commercial immovable property . 2 figures for 2 quarter has to be filled. I can’t understand why a single return can’t be filed and accepted  in all forms for this category paper/efile. Why the citizen are force to efile. I can understand for business folks. e-filing has lots of benefits but a nuisance for seniors who do not rely running to their CA or Ser. Tax providers. who say’s if I can’t access my log in they will not be able to help. Therefore the citizen is place more in difficulty to comply.  Ser. Tax dept ask the citizen for suggestions this year what was the out come is still unknown. Would appreciate if the superintendent or commissioner of Ser. Tax would allow having 1 commercial rented property to file in paper/ e-file. the citizen who wish to comply should not be put in difficulty.       

  10. Anilkumar P P says:


    StT-3 return is to be revised within 90 days of filing the return. We tried to revise on the 91st day of filing due to some corrections of taxable value provided in the original return . But it was not possible. Then how can we revise it? Is there any way? Please guide sir..

  11. RAJESH says:

    Respected sir,
    I have registered for Stax in nov 2009 & I have not filed 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 return, but tax is nil.


  12. krishav says:

    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

  13. Sridhar says:

    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

  14. priyankar says:

    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 ?

  15. suketu says:

    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,

  16. ashit shah says:


    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.

  17. Sanjay Aggarwal says:


    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

  18. CA Rajesh Goyal says:

    Gautam Sir

    Its Rs. 500 and 1000 in lumpsum and not per day for delay of upto 15 days and 15-30 days respectivley

  19. Sunil Kumar says:

    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.

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