2013 (6) TMI 641 - AT - Service Tax

Tribunal sets aside penalty under Rule 7C for non-provision of services, assessing officer's discretion

The Tribunal allowed the appeal, setting aside the penalty imposed under Rule 7C of the Service Tax Rules, 1994, due to the appellants' non-provision of ... Waiver of late fees under Rule 7C of the Service Tax Rules - nil ST-3 return filing requirement when no service rendered (Board Circular No.97/8/07-ST) - discretion of assessing officer under proviso to Rule 7CWaiver of late fees under Rule 7C of the Service Tax Rules - nil ST-3 return filing requirement when no service rendered (Board Circular No.97/8/07-ST) - discretion of assessing officer under proviso to Rule 7C - Whether late fees under Rule 7C for belated filing of 'nil' ST-3 returns for the period April, 2005 to March, 2008 should be waived. - HELD THAT: - The appellants were registered for service tax but did not render any service during April, 2005 to March, 2008 and filed six 'nil' ST-3 returns belatedly on 18.11.2008. Board Circular No.97/8/07-ST dated 23.08.2007 provides that where no service is rendered there is no requirement to file ST-3 returns, and the Department produced nothing to contradict this. Rule 7C permits imposition of late fees for delayed ST-3 returns, but the proviso to Rule 7C confers discretion on the assessing authority to waive late fees in respect of 'nil' returns. Applying these principles and following the Tribunal's earlier view in analogous matters, the proviso to Rule 7C was held to be appropriately invoked to waive the late fees relating to the nil returns filed for the period April, 2005 to March, 2008.The Commissioner (Appeals) order confirming late fees under Rule 7C is set aside; late fees relating to the 'nil' ST-3 returns for April, 2005 to March, 2008 are waived and the appeal is allowed.Final Conclusion: Appeal allowed; late fees under Rule 7C for the belatedly filed 'nil' ST-3 returns for April, 2005 to March, 2008 are waived and the impugned confirmation of late fees is set aside. Issues:Penalty under Rule 7C of Service Tax Rules, 1994 and Section 77 of the Finance Act, 1994 for late filing of 'nil' returns.Analysis:The appeal was filed against the Order-in-Appeal passed by the Commissioner of Central Excise (Appeals), Kolkata. The appellants, engaged in providing taxable services, had filed six 'nil' returns in ST-3 form for the period from September 2005 to March 2008 on 18.11.2008. A show-cause notice was issued proposing penalties 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 imposed a penalty of Rs.2,000 under Section 77 of the Finance Act, 1994. The Commissioner (Appeals) dropped the penalty under Section 77 but confirmed the penalty of Rs.12,000 under Rule 7C. The appellant then appealed against this decision.The appellant did not appear during the hearing despite receiving advance notice. The Department's representative reiterated the Commissioner (Appeals)'s findings, arguing that since the penalty under Section 77 was dropped, there was no reason to waive the late fees under Rule 7C. The Tribunal noted that the appellants were registered for providing taxable services but had not rendered any services or filed returns from April 2005 to March 2008. Referring to a Board's Circular, it was established that no service provider is required to file ST-3 Returns if no services are provided. Additionally, Rule 7C allows the assessing officer discretion to waive late fees for filing 'nil' returns. The Tribunal invoked the proviso to Rule 7C and waived the late fees for the 'nil' returns filed by the appellant. A previous Tribunal decision supported this view, leading to the setting aside of the Commissioner (Appeals)'s order and allowing the appeal.In conclusion, the Tribunal allowed the appeal, setting aside the penalty imposed under Rule 7C of the Service Tax Rules, 1994, due to the appellants' non-provision of services during the relevant period and the discretionary power of the assessing officer to waive late fees for 'nil' returns.