Although, with the government resorting to implement unified taxation regime GST in near future, it was hoped that the number of returns to be filed by an assessee would reduce substantially and this has been done in case of Central Excise Assessees which is highly appreciated by the trade and industry. However, at the same time, service tax assessees will be required to file Annual Return in addition to the half yearly returns presently filed by them. This has been done by amending Rule 7 of the Service Tax Rules, 1994 which will be applicable with effect from 01.04.2016. This article is an attempt to analyse the probable consequences of the amendment.

Glimpse of the Amendment:- Vide notification no. 19/2016-ST dated 01.03.2016, the Central Government has amended the Rule 7 of Service Tax Rules, 1994 by inserting certain new sub rules after sub rule (3) which read as follows:-

“(3A) Notwithstanding anything contained in sub-rule (1), every assessee shall submit an annual return for the financial year to which the return relates, in such form and manner as may be specified in the notification in the Official Gazette by the Central Board of Excise and Customs, by the 30th day of November of the succeeding financial year;

(3B) The Central Government may, subject to such conditions or limitations, specify by notification an assessee or class of assesses who may not be required to submit the annual return referred to in sub-rule(3A).”

Apart from this, amendments have been made in Rule 7B in order to facilitate revision of annual returns and in Rule 7C so as to impose late fees in case of delay in filing of annual return which is specified as amount calculated at the rate of one hundred rupees per day for the period of delay subject to maximum of twenty thousand rupees.

Analysis of the Amendment:-

  • Every assessee shall file an annual return in prescribed form. Government may exempt class of assessees who may not be required to submit annual return subject to conditions of limitations prescribed in the notification. It is pertinent to note that as per Notification no. 17/2006-C.E. (N.T.) dated 01.08.2006 as amended by Notification no. 42/2008-C.E. (N.T.), a Central Excise Assessee, who has paid duty of excise less than one hundred lakh rupees during the financial year to which Annual Financial Information Statement relates is exempted from filing the said statement in Form ER-4 that is required to be filed latest by 30th November of the succeeding year as per the provisions of Rule 12(2)(a) of the Central Excise Rules, 2002. Accordingly, it may be hoped that similar exemption is provided to service tax assessees based on the quantum of service tax paid in a financial year. However, as the small scale exemption limit in excise is much higher than that prevalent in service tax, there is possibility that the limit of service tax payment may be specified on lower side.
  • The last date for filing of annual return is 30th November of the succeeding financial year with the option to revise the return within one month from the date of filing of original return. The provision enabling revision of return is welcomed.
  • Late filing of annual return will invite late fees at the rate of Rs. 100/- per day during the period of delay subject to maximum of Rs. 20,000/-

Before Parting:-

Although, the requirement of Annual Return is akin to the ER-4 return to be filed by Central Excise assessees, but there will be substantial difference in the details to be submitted in the annual return filed by the service tax assessees. Moreover, in service tax laws, not only service providers but service receivers are also liable to pay service tax under special circumstances which is commonly known as ‘reverse charge mechanism’ or ‘partial charge mechanism’. Consequently, the assessees paying service tax under ‘reverse charge mechanism’ should be exempted from filing Annual Returns as the return would normally require assessees to provide information as regards income/expenditure incurred by them.

(Article is Authored by CA Pradeep Jain, CA Neetu Sukhwani & Neelam Jain)

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Tags : Budget 2016 (434) CA Pradeep Jain (195) ST-3 (70)

10 responses to “Service Tax Assessees To File Annual Return”

  1. Anuj says:

    For F/y 2015-16, due date of annual return of service tax ???
    Or is it applicable from financial year 2016-17.

  2. Kapil Ambekar says:

    Important info…..for update me

  3. Roshni Gupta says:

    Whether annual return needs to be filed for the F.Y. 2015-16 or it is applicable from F.Y. 2016-17

  4. VJ says:

    Whether annual return needs to be file for the F.Y. 2015-16 or it applicable from F.Y. 2016-17


    very use ful information provided above.



  7. E SASIDHARAN says:

    These are very useful informaions and thanks for the same. Is it possible to pl mail me the format of Annual reurn to be filed in Nov 2016. With regards

  8. pradeep says:

    Can you please let me know , what is exemption limit for filling ST- annual return by service provider.

  9. vuunikrishnan says:

    The newly introduced annual return should be welcomed.Once we give the copy of the audited balance sheet every year with additional details as may be prescribed,the assessees can be free of the ‘Democle’s sword’ of suppression ,invoking section 78 etc.Now a days, invariably,the audit parties are simply quoting the figyres from balance sheet and demand the tax on the difference from ST3 value,alleging suppression.This would end once for all,when the annual returns are filed.Even if the copy of balance sheet is not made mandatory,it is suggested that the ICAI can suggest all assessees to file a copy of their annual statement of accounts to the CEx and Service tax depts. so as to escape from charge of suppression with intent to evade tax etc..unnikrishnan.V ,cochin.

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