Section 70(1) requires every person liable to pay service tax shall assess the tax due and shall file a “return” to the Superintendent of Central Excise (Online). Rule 7 of Service Tax Rules, 1994 prescribes the form, manner and frequency of filing of return as follows.
|Form of return||=>||Form ST-3|
|Periodicity of filing||=>||Half-yearly basis|
|Due date of filing:|
|v 1st April to 30th September||=>||25th October|
|v 1st October to 31st March||=>||25th April|
What happens when the due date of filing of service tax return falls on the public holiday?
In this article, below key changes / amendment under Service Tax Laws relevant for filing of Service Tax Returns (ST-3) for FY 2016-2017 are discussed:-
(I) Krishi Kalyan Cess (“KKC’’):-
KKC is levied on any or all taxable services at the rate of 0.5% on the value of such taxable services w.e.f 01.06.2016. Even KKC has to be remitted under Reverse Charge Mechanism of Service Tax as per Notification No. 27/2016-ST dated May 26, 2016.
As per Notification No. 28/2016-CE (N.T.) dated May 28, 2016, Credit of KKC paid on input services shall be allowed and can be utilized only for payment of such Cess on the output services provided by a “Service Provider”.
The Credit of KKC is not available to “Manufacturers”, thus it increases the cost to the Manufacturers.
3. Accounting Head for Payment:-
|KKC (Minor Head)||Tax Collection||Other Receipts (Interest)||Deduct Refunds||Penalties|
4. Point of Taxation for KKC for Service Provider:-
Rule 5 is applicable for determination of KKC liability due to the amendment in Budget 2016-17 and Notification No. 35/2016 also clarifies the same.
Amendment under Rule 5:- POT would be determined by using Rule 5 in case of new levy or tax.
Since KKC is a new levy on taxable services, Rule 5 is applicable for determining POT. But Rule 5 does not consider the point of time of “completion of services”. So to clarify this aspect Notification No. 35/2016-Service Tax was released on 23rd June 2016 which is explained below:
Notification No. 35/2016-ST dated 23.06.2016:- It exempts taxable services, with respect to which the invoice for the service has been issued before 01st June, 2016, from the whole of Krishi Kalyan Cess leviable thereon, subject to condition that the provision of service has been completed before the 01st June, 2016. This notification provides relief to Service Providers from paying KKC on services completed before the applicability of KKC.
5. Point of Taxation for KKC for Service Receiver under Reverse Charge Mechanism:-
Rule 7 is applicable for determination of KKC liability. It starts with non-abstante clause i.e., notwithstanding anything contained in Rule 3, 4 or 8.
POT is as follows:
As per Notification No. 21/2016-ST dated 30.03.2016, as proviso is inserted in Rule 7, Where there is change in the liability or extent of liability of tax to be paid under RCM and Service has been provided and the invoice issued before the date of such change, but payment has not been made as on such date, then POT shall be —> the “date of invoice”. This notification provides relief to Service Receivers, since KKC is not required to remit for payments made after 01.06.2016 but invoice dated before 01.06.2016.
(II) Government Services under RCM:-
Service Tax under RCM was required to be remitted for only “Support Services” received from Government but w.e.f from 1st April 2016, word “support services” is replaced with “any services”, thereby “all services” provided by the Government or a local authority are subject to service tax under RCM.
Accordingly Circular No. 192/02/2016 – Service Tax Dated 13.04.2016 is released for providing clarifications and Mega Exemption Notification No. 25/2012 dated 20.06.2012 is amended vide Notification No. 22/2016 Dated 13.04.2016 to exempt certain services provided by Government or a local authority.
2. Relevant Extracts of Circular:-
|SNO.||Details||Service tax chargeable or not|
|1||Taxes, cesses or duties||Not|
|2||Fines and penalties:-|
|(a)||For violation of a statute, bye-laws, rules or regulations.||Not|
|(b)||For non-performance of contract entered into with Government or local authority||Not|
|3||Services provided in lieu of fee charged by Government or a local authority chargeable to tax except the below:|
|(a)||Gross amount charged for such service does not exceed Rs 5000/- (For one time service).||Not|
|(b)||In case of continuous service, the exemption shall be applicable where the gross amount charged for such service does not exceed Rs. 5000/- in a financial year.||Not|
|(c)||Services provided by the Government or a local authority by way of:
(i) Registration required under the law;
(ii) Testing, calibration, safety check or certification relating to protection or safety of workers, consumers or public at large, required under the law.
|4.||Issuance of passport, visa, driving license, birth certificate or death certificate||Not|
3. CENVAT Credit for Government Service under RCM:-
Cenvat will be allowed if such payment falls under the definition of “Input Service” and is not covered under exclusions as provided in definition of input service. CENVAT Credit can be availed on the basis of challan evidencing payment of Service Tax by the Service recipient
4. Point of Taxation for Government Services:-
Rule 7 is applicable for determination of POT under RCM. As per Notification No. 24/2016-Service Tax Dated 13.04.2016, Rule 7 is amended by adding a proviso for determination of POT for the services provided by the Government or a local authority.
Accordingly, POT will be “Due date of payment (as per the invoice, bill, challan or any other document)” or “Actual date of payment for such services” whichever is earlier.
5. Practical Scenarios for applicability Government Services:-
chargeable or not
|1.||Fees paid for filing of TDS Return||Not||Mostly less than Rs. 5,000|
|2.||Fees Paid under Section 234E (for late filing of quarterly TDS Returns)||Not||Under Fines and Penalties|
|3.||Payments made to BSNL||Not||Not covered under definition of “Government”|
|4.||Water Charges||Not||Mega Exemption Notification and also supply of water is not a service|
|5.||Electricity||Not||Electricity boards not covered under definition of “Government”|
|6.||Fees paid to Registrar of Companies (ROC) for various services||Chargeable||Not chargeable to service tax if less than Rs. 5,000 in a financial year.|
(III) CENVAT Credit Rules:-
1. Reversal of CENVAT Credit under rule 6(3A):-
Assessee providing both exempted and non-exempted goods and service have to reverse or pay the Credit not allowed on account of being engaged in providing exempted activities in the manner laid under rule 6(3A).
Amendment vide Notification No. 13/2016 – CE(NT) Dated 01.03.2016 effective from 01.04.2016:
Rule 6(3A) is amended to provide the procedure for calculation of Credit allowed and Credit not allowed and directs that such Credit not allowed shall be paid or reversed, provisionally for each month as follows:
Now the procedure of reversal under u/r 6(3A) sounds fair and rational.
2. Distribution of CENVAT Credit by Input Service Distributor (ISD) under rule 7:-
ISD distributes CENVAT Credit to its units based on Turnover by issuing invoice as mentioned under Rule 4A of Service Tax Rules, 1994.
W.e.f from 01.04.2016, as per Notification No. 13/2016 – CE(NT) Dated 01.03.2016, ISD can distribute CENVAT Credit in respect of ST paid by it to its manufacturing units, Units providing Services and additionally to its “Outsourced manufacturing units” also on pro-rata basis of turnover subject to the following conditions:
Note: The Credit available with ISD as on 31st March 2016, cannot be distributed to Outsourced manufacturing units.
(IV) Interest on Late Payment of Service Tax:-
It is amended by Finance Bill, 2016 w.e.f from 14th May 2016. The earlier provisions and new provisions are tabulated below:
|From 01st October 2014 to 14th May 2016||After 14th May 2016|
|Slab interest rates:
· Interest @ 18% for delay upto 6 months
· Interest @ 24% for delay above 6 months upto 1 year
· Interest @ 30% for delay in more than 1 year
|Interest is as follows:
· Service Tax collected but not deposited to the Central Government – 24% p.a (For Service Providers)
· Other than above cases – 15% p.a (For Service Receiver under RCM)
(V) Form ST-3 Amendments:-
As per Notification No. 43/2016-Service Tax dated 28.09.2016, Form ST-3 (Service Tax Return) is amended to facilitate the presentation of above changes. Tables relating to the details of KKC (CENVAT, Payment and Liability) and detailed disclosure of reversal u/r 6(3A) is included in the amended Form ST-3.
The amendment made can be seen in the above mentioned notification.
As per Notification No. 43/2011 – ST Dated: 25.08.2011, every assessee is mandatorily required to electronically file the Service Tax Return (Form ST-3). Return can be filed at the website: www.aces.gov.in.
In case of any difficulty in accessing the ACES Application or in filing the ST-3 returns, the assesses can seek help of the ACES Service Desk by sending e-mail to “firstname.lastname@example.org” or calling up National Toll-free number 1800 425 4251.
As per Rule 7B of Service Tax Rules, 1994, an assessee can file revised return in same Form ST-3 within 90 days of filing of original return.
Even if no service has been provided and also no service tax payable during a half-year, the assessee has to file a nil return within the due date given above.
Mode of Filing:
Returns can be prepared and filed online by selecting the “File Return” option under “RET” module after logging into the ACES.
Returns can also be prepared offline using Offline return preparation utility available at www.aces.gov.in (Under Download) and the XML generated from offline utility can be uploaded online after logging into the ACES.
Late filing of Return:
Notification No. 20/2007 – ST dt. 12.05.2007 introduced Rule 7C of Service Tax Rules, which prescribes fees for late filing of service tax return as follows:
|Delay from due date||Late filing fees|
|Upto 15 days||Rs. 500|
|16 days to 30 days||Rs. 1,000|
|Beyond 31 days||Rs. 1,000 + Rs. 100 per day from 31st day till the date of filing of return.|
Note: Total late filing fees shall not exceed Rs. 20,000.
This article has been prepared from the provisions of the Act, Notifications & Circulars and is solely for better understanding of the rules & regulations and neither I suggest nor recommend any action based on the information provided above.
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