2013 (1) TMI 245 - AT - Service Tax

Construction in respect of commercial or industrial building and civil structure services - appellants filed Six nil returns in ST-3 form for the period September, 2005 to March, 2008 on 18/11/2008 - late fees on belated returns - Held that - As the appellant were registered with the Service Tax Department for providing taxable services & during the period April 2005 to March, 2008 have not provided any service and also they have not filed any returns with the Department filling six ST-3 nil Returns belatedly on 18/11/2008. In view of the circular dated 23/8/2007 in the event no service is rendered by the service provider, there is no requirement to file ST-3 Return. Besides as per Rule 7C of the Service Tax Rule, in the event nil returns are filed, the assessing officer had the discretion to waive the late fees for filing the ST-3 Returns. Thus it is a fit case to invoke the proviso to Rule 7C and waive the late fees relating to the Nil Returns filed during the period April, 2005 to March, 2008 - the appeals filed by the Appellants are hereby allowed.

Summary

Issues:
- Penalty under Rule 7C of the Service Tax Rules, 1944 and Section 77 of the Finance Act, 1994 for late filing of 'nil' returns.

Analysis:
The appellant, engaged in providing taxable services, filed six 'nil' returns belatedly for the period from September 2005 to March 2008. The adjudicating authority imposed a penalty of Rs.12,000/- for each return and an additional penalty under Section 77 of the Finance Act, 1994. The Ld. Commissioner (Appeals) dropped the penalty under Section 77 but confirmed the penalty under Rule 7C. The appellant argued that as per circular No. 97/8/07-ST, they were not required to file returns when there was no service tax liability. They contended that since no services were provided during the period, the late fees should be waived as per the proviso to Rule 7C.

The Revenue, represented by Ld. A.R., supported the decision of the Ld. Commissioner (Appeals) and opposed waiving the late fees, citing the previous dropping of the penalty under Section 77. After hearing both sides and reviewing the records, the Tribunal found that the appellants were registered with the Service Tax Department but had not provided any services during the relevant period. The Tribunal agreed with the appellant's argument that as per the circular, when no services were rendered, filing 'nil' returns was not mandatory. Additionally, the Tribunal noted that Rule 7C allows for the waiver of late fees for 'nil' returns. Therefore, invoking the proviso to Rule 7C, the Tribunal decided to waive the late fees related to the 'nil' returns filed by each appellant. Consequently, the order of the Ld. Commissioner (Appeals) was set aside, and the appeals filed by the appellants were allowed. The Tribunal ruled in favor of the appellants, allowing the appeals and waiving the late fees for filing 'nil' returns during the specified period.

This judgment highlights the importance of adherence to circulars issued by tax authorities and the discretion available to assessing officers under relevant rules for penalty imposition. It underscores the significance of providing services in determining tax liabilities and the applicability of penalties for late filing based on specific circumstances and legal provisions.