Service Tax Returns periods come, and there are many new startups or small businesses registered under the service tax registration. Still, they did not start their business or have a turnover of less than 10 lac in a year. The dilemma is whether they have to file the NIL Service Tax Returns for Compliance or not?
There is no proper resolution to this question because when startups want to close their business, they always ignore the filings of the Returns. After all, if they hire any professional for the same, assessments are near 500 to 1500/- INR. New or unprofitable businesses always try to avoid compliances.
Nil Service Tax Returns Mandatory or Not
As per the Law, there are two answers regarding the NIL Service Tax Return Filings, which is reasonable and clear all the confusion.
Point of Views
Government official Portal FAQ Papers
The first clarification is related to the official government service tax portal, which provides information about the case laws, service tax law, and other details. There is particularly stated that” whether you are implementing the taxable services or not, for the compliance you have to File the NIL Returns promptly, as per the official Service Tax Law FAQ List in Para 4.9.
So, it means whether your business is running or not, if you do not cancel or surrender your service tax registration, you always have to file the NIL Service Tax Returns. Even if you manage the business and do not charge the service tax or have a turnover of less than 10 lac, you must have to file the NIL Service Tax Returns.
The Tribunals and Case Laws
A circular under 97/8/2007 was issued by CBEC where you can find a moment under para six that persons who are not liable to pay service tax (because of an exemption including turnover-based exemption) are not required to file the ST-3 Return.
Now, let’s talk about the case law. “Amrapali Barter Case” is a case where the assistance provider is registered under the service tax but not provided any services during a unique return cycle and also not liable to pay any service tax.
So, in this case, the Tribunal has continued that the service provider is not obligated to file the service tax return or nil returns for that period as per the CBEC Circular 97/8/2007, which is discussed above.
Penalty for Nil Service Tax Returns
So, as we considered above that NIL Service tax returns can be filed or not. If we assume point 1, then you have to file the service tax return else for non-filings of the NIL Service Tax Returns, following penalties will be raised –
- Applications delayed by or till 15 days from the due date – Rs.500 late fees.
- Applications delayed by or till 30 days (over 15 days, under 30 days) from the due date – Rs.1,000 late fees.
- Applications delayed for over 30 days – Rs.1,000 + Rs.100 late fees.
Suppose we check out the filings of the NIL Returns. In that case, it’s not much cost instead of the bearing penalty, so invariably, you have to file the NIL Service Tax Returns because the 2nd point depends on the circulars and case laws. Therefore, if the case law arises, you have to pay the fees to the representative for clarification to the superintendent and officers.