Penalty for late filing of Nil Service Tax Return may be waived.

PJ/Case Law/2013-14/2093

Case:- AMRAPALI BARTER PVT. LTD. Vs COMMISSIONER OF SERVICE TAX, KOLKATA

Citation:- 2013 (32) S.T.R. 456 (Tri. – Kolkata)

Brief facts:- The applicants were 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 each of 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 Finance Act, 1994 against each of the appellants. Aggrieved by the same, the appellants had filed appeals before the ld. Commissioner (Appeals). The ld. Commr. (Appeals) dropped the penalty under Section 77 of the Finance Act but confirmed the penalty of Rs. 12,000/- against each of the appellant under Rule 7C of Service Tax Rules. Hence two appeals were filed by the appellants against order-in-appeal No. 144-145/ST/KOL/2012, dated 30-4-2012 passed by the Commissioner of Central Excise (Appeals), Kolkata.

Appellant’s contentions:- The ld. Advocate appearing for the appellants submitted that in view of the Circular No. 97/8/2007-S.T., dated 23-8-2007, they were not supposed to file half yearly returns in ST-3 Form as the liability to pay Service Tax during the said period was nil. She further submitted that during the period they had not provided any service and hence there was no liability to pay Service Tax. However, as a matter of abundant precaution, they submitted six half yearly ‘nil’ returns from the period April, 2005 to March, 2008 on 18-11-2008. Further, she held that in view of the proviso to Rule 7C, the ld. authorities below ought to have waived the late fees.

Respondent’s contentions:- Ld. AR for the revenue reiterated the findings of the ld. Commissioner (Appeals) and submitted that the ld. Commissioner (Appeals) had already dropped the penalty under Section 77 of the Finance Act, 1994. Therefore, there was no reason to waive the late fees directed to be paid under Rule 7C of the Service Tax Rules, 1994.

Reasoning of judgment:- Heard both sides and perused the records. Undisputedly, the appellant were registered with the Service Tax Department for providing taxable services. It was also not in dispute that during the period April 2005 to March, 2008, they had not provided any service and also they had not filed any returns with the Department. They had filed six ST-3 nil Returns belatedly on 18-11-2008. The Hon’ble Judge agreed with the ld. Advocate that in view of the Circular dated 23-8-2007, in the event no service was rendered by the service provider, there was no requirement to file ST-3 Return. The ld. AR could not produce anything contrary to the said circular. Besides, it was found that as per Rule 7C of the Service Tax Rules, in the event ‘nil’ returns were filed, the Service Tax Appeal Nos. 394-395/2012 assessing officer had the discretion to waive the late fees for filing the ST-3 Returns. In Tribunal’s view, it was a fit case to invoke the proviso to Rule 7C and waive the late fees relating to the Nil Returns filed by each of the appellant during the period April, 2005 to March, 2008. In these circumstances, the order of the ld. Commissioner (Appeals) was set aside and the appeals filed by the appellants were allowed.

Decision:- Appeals were allowed.

Comment:- The analogy drawn from the case is that in view of the Circular dated 23-8-2007, it has been clarified that in the event where no service was rendered by the service provider, there was no requirement to file ST-3 Return. Further, as per Rule 7C of the Service Tax Rules, in the event where belated ‘nil’ returns were filed, the assessing officer had the discretion to waive the late fees for filing the ST-3 Returns. Accordingly, the late fees for filing Nil returns of service tax was waived and the appeal was allowed.

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PJ/Case Law/2013-14/2093

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