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FILING AND SCRUTINY OF SERVICE TAX RETURNS

Service Tax - By: - Mr. M. GOVINDARAJAN - Dated:- 20-10-2015 Last Replied Date:- 6-12-2015 - Filing of service tax returns Section 70 of Chapter V of Finance Act, 1994 ( Act for short) provides for filing of service tax returns. Section 70(1) of the Act and Rule 7 and of Service Tax Rules, 1994 provides the method of filing service tax return as detailed below: Every person liable to pay the service tax shall himself assess the tax due on the services provided by him and shall furnish the same t .....

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special nature to be specified in such order; Every assessee shall submit the return electronically with effect from 01.10.2011. Section 70(2) of the Act provides that the person or class of persons notified under Section 69(2) of section 69, shall furnish to the Superintendent of the Central Excise, a return in such form and in such manner and at such frequency as may be prescribed. Late fee Section70 (1) read with Rule 7C provides for the late fee payable in case of the return is filed after .....

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paid the amount as prescribed under this rule for delayed submission of return, the proceedings, if any, in respect of such delayed submission of return shall be deemed to be concluded. NIL return During any half year where the gross amount of taxable service is NIL, a NIL return is to be filed within the prescribed time limit. NIL return shall be filed after the cessation of a particular service and up to the date of surrender of registration certificate. If there is delay in filing the NIL re .....

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1 - Registrations and returns filed Year No. of Service tax registrations No. of assessees who filed returns FY 09 1226100 7641 FY 10 1339812 55405 FY 11 1494449 179344 FY 12 1676105 706535 FY 13 1871939 608013 FY 14 1276861 1004812 Source: CAG Report 2014 & 2015 The above table shows that the number of service tax returns filed is on the increase except for the financial year 2013-14. Still many of the assessees who registered have not filed service tax returns. Penalty for non filing retu .....

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f penalty for non filing of service tax return was justified as the appellant had not challenged the demand for the extended period of limitation and there had conceded suppression of fact with intent to evade payment of service tax. The tax though paid prior to issuance of show cause notice but the same was paid only after the investigation was launched by the Department. The High Court, Karnataka also dismissed the appeal filed by the appellant against the order of Tribunal. Payment of service .....

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eturns filed. If there is any material change in the nature on terms and conditions of the transaction the same should have been brought to the notice of the department which the appellant has failed to do in the instant case. The Tribunal upheld the demand of service tax and interest. Recovery of service tax Section 73 of the Act provides for the recovery of service tax not levied or not paid or short levied or short paid or erroneously refunded. Section 73(1) provides that in such cases the Ce .....

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with intent to evade payment of service tax. Section 73 (6) of the Act defines the term relevant date as- in the case of taxable service in respect of which service tax has not been levied or paid or has been short-levied or short-paid- where under the rules made under this Chapter, a periodical return, showing particulars of service tax paid during the period to which the said return relates, is to be filed by an assessee, the date on which such return is so filed; where no periodical return as .....

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In case the return is revised as per Rule 7C, then the relevant date is the date of filing of the revised return. Thus filing return is considered as the criteria for taking action by the Revenue to recover the tax by invoking the extended period of limitation. Here some case laws discussed on invoking the extended period of limitation: In M.P. Laghu Udyog Nigam Limited V. Commissioner of Central Excise, Bhopal - 2014 (8) TMI 707 - CESTAT NEW DELHI it was held that non registration, non filing .....

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cation of extended period of time to confirm the tax demand cannot be faulted at all. Recovery of tax without show cause notice Section 112 (i) of the Finance Act, 2015 inserted Section 73(1B) with effect from 14.05.2015. The said section provides that notwithstanding anything contained in sub-section (1), in a case where the amount of service tax payable has been self-assessed in the return furnished under Section 70(1), but not paid either in full or in part, the same shall be recovered along .....

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of service tax on provisional basis and the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, on receipt of such request, may allow payment of service tax on provisional basis on such value of taxable service as may be specified by him and the provisions of the Central Excise Rules, 2001, relating to provisional assessment, except so far as they relate to execution of bond, shall, so far as may be, apply to such assessment. Rule 6(5) provi .....

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sessment on the part of the tax payer is only a facility and cannot and must not be treated as a dilution of the statutory responsibility of the Central Excise Officers in ensuring the correctness of duty payment. No doubt, audit and anti-evasion have their roles to play, but assessment or confirmation of assessment should remain the primary responsibility of the Central Excise Officers. Vide Circular No. 113/07/2009-St, dated 23.04.2009 the Revenue proposed for the scrutiny of ST-3 returns. For .....

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scrutiny The purpose of preliminary scrutiny would be to ensure- completeness of the information furnished such as PAN No., description of the service tax category including the service tax accounting code and registration details of the units including details of centralized registration; timely submission of the return; timely payment of duty; arithmetic accuracy of the amount computed as duty in the return; and identification of non filers and stop filers. The following table will depict the .....

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7335 795581 34.63 84944 710637 89.32 Source: CAG Report 6/2014 and 4/2015 After the introduction of ACES a very high percentage of cases have been scrutinized by ACES each year for review and correction (R&C). The percentage of returns marked for R&C by ACES have come down drastically to 34.63% in FY 14 which is a healthy sign and indicate stabilization of ACES and it needs to be taken further. C&AG observed that 89.32% of returns marked for R&C were pending as on 31.03.2014. It .....

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taking into account the admissibility of the exemption notification availed, if any; determining the correct value of taxable services in terms of the Finance Act, 1994 read with Service Tax Valuation Rules; and ensuring correct availment of CENVAT credit on input, capital goods and input services in terms of the CENVAT Credit Rules, 2004. Only 2% of returns are needed to be examined in detailed scrutiny. There are nearly 2272 ranges all over India. The detailed scrutiny selected are other than .....

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43 21095 19791 934 370 FY 14 44045 16201 27844 12974 5174 17636 Source: CAG Report 04/2015 The C&AG observed that in the selection of large number of detailed scrutiny there will be no scope for issue a demand notice to an assessee beyond 18 months from the date of filing of returns by assessee. Revised procedure for scrutiny of ST returns The CBE&C issued revised manual scrutiny of service tax returns with effect from 01.08.2015. In this manual it is indicated that a Return Scrutiny Cel .....

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