NIL Service Tax Returns Filings Dilemma : Solutions

Service Tax Returns seasons come and there are a lot of the new startups or small business which are registered under the service tax registration but they did not start their business or have a turnover less than 10 lac in a year. So Now Dilemma is whether they have to file the NIL Service Tax Returns for the Compliance or not ?

Actually, there is no perfect answer to this question because sometimes when startups are want to close their business then they always ignore the filings of the Returns because if they hire any professional for the same then charges are nearby 500 to 1500/- INR. New business or unprofitable business always try to avoid the compliances.

NIL Service Tax Returns

Nil Service Tax Returns Mandatory or Not

As per the Law, there is the 2 answer regarding the Filings of the NIL Service Tax Return which is reasonable and clear your all the confusion.

Government official Portal FAQ Papers Point of View –

So first clarification is related to the official government service tax portal which provides the information about the service tax law, case laws, and other details. As per the official Service Tax Law FAQ List in the Para 4.9 there is particularly mentioned that ” whether you are providing the taxable services or not, for the compliance you have to File the NIL Returns in a timely manner.

FAQ Point for the NIL Service Tax Returns So its mean whether your business is running or not , if you do not cancel or surrender your service tax registration, you have to always file the NIL Service Tax Returns. Even if you are doing the business and not charge the service tax or have the turnover less than 10 lac, you must have to file the NIL Service Tax Returns.

Recommendation for Read : Service Tax Return Due Dates for the year 2016

From the Tribunals and Case Laws Point of View

Now talk about the second point of view i.e is from the Tribunals or Circular and Case Law. CBEC issued a Circular Under 97/8/2007 where you can find a point under the para 6 that person 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.

service-tax-nil-returns-filings

Now if we talk about the case law then there is a case law “Amrapali Barter Case” where the service provider is registered under the service tax but not provided any services during a particular return cycle and also not liable to pay any service tax.

So, in this case, the Tribunal has held that the service provider is not required to file the service tax return or nil returns for that period of the term as per the CBEC Circular 97/8/2007 which is mentioned above.

Nil Service Tax Returns Penalty

So as we discussed above that NIL Service tax returns can be filed or not. If we consider the point 1 then you have to file the service tax return else for nonfilings of the NIL Service Tax Returns following penalties will be raised –

  • Rs.500 late fees for applications delayed by up to 15 days from the due date.
  • Rs.1,000 late fees for applications delayed by up to 30 days (over 15 days, under 30 days) from the due date.
  • Rs.1,000 + Rs.100 late fees for applications delayed for over 30 days.

Conclusion  on Filings of the NIL Service Tax Return –

If we check out the filings of the NIL Returns then it’s not much cost instead of the bearing penalty so always you have to file the NIL Service Tax Returns because the 2nd point depends on the circulars and case laws so if the case law arises then you have to again pay the fees to the representative for the clarification to the superintendent and officers.