Late fee for delay filing of ST 3 Return.

[MANASH MUKHERJEE]

Sir, A Show Cause Notice issued from Range Superintendent for late submission of ST 3 Returns. Maximum penalty imposed amounting to ₹ 20000/. Now the case is to be adjudicated.Can the amount be reduced and under what provision or the amount is bound to pay.Please provide any case law in this regard.

Thanks.

[KASTURI SETHI]

Penalty under Section 70 is mandatory. However, if transaction is nil, then there is Board's circular to save you from penalty. Read the highlighted portion of case law. This case law is anti-assessee.

COMMISSIONER OF C. EX. & CUS., AURANGABAD Versus BANSOD CLASSES 2016 (41) S.T.R. 513 (Tri. - Mumbai) - 2015 (4) TMI 614 - CESTAT MUMBAI
 

[Ganeshan Kalyani]

Sir, I agree with Sri Kasturi Sir's view. Additionally my view is you please find out why such delay has happened. Is there any liability involved during the period of delay. If there is no liability involved in very rare cases department may exceptionally wave the penalty. And if not then what Sri Kasturi Sir has replied is to be noted. Thanks.

[KASTURI SETHI]

If no ST is payable no late fee for late filing of ST-3, if ST is involved, there is no escape route. Relevant para is extracted below:-

2016 (5) TMI 845 - CESTAT MUMBAI - M/s. Patwari Electricals Versus Commissioner of Central Excise, Customs & Service Tax, Aurangabad

"As regard the late fee, I find that admittedly the service tax was confirmed only for the period July,2012 to March, 2013 therefore no late fee can be charged for delay of filing/non filing of ST3 returns for the period prior to 1/7/2012. However, the service tax liability confirmed and admittedly paid by the appellant for the period July, 2012 to March, 2013, the appellant was duty bound to file ST3 returns for this period on due date therefore the appellant is liable for late fee for non filing/delayed filing of ST3 returns for the period July, 2012 to March, 2013 in terms of Section 70 read with Rule 7C of Service Tax Rules, 1994. As per my above discussion, appeal is partly allowed in the above terms."

(Order pronounced in court )

[DR.MARIAPPAN GOVINDARAJAN]

Rule 7(c) provides that

Where the return prescribed under rule 7 is furnished after the date prescribed for submission of such return, the person liable to furnish the said return shall pay to the credit of the Central Government, for the period of delay of-

(i) fifteen days from the date prescribed for submission of such return, an amount of five hundred rupees;

(ii) beyond fifteen days but not later than thirty days from the date prescribed for submission of such return, an amount of one thousand rupees; and

(iii) beyond thirty days from the date prescribed for submission of such return an amount of one thousand rupees plus one hundred rupees for every day from the thirty first day till the date of furnishing the said return:

Provided that the total amount payable in terms of this rule, for delayed submission of return, shall not exceed the amount specified in section 70 of the Act:

Provided further that where the assessee has 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.

The late fee does not amount to penalty. It is calculated as per the delayed time in filing the return. The said late fee can be waived only if the gross service tax payable is NIL, at the discretion of the authorities.

[KASTURI SETHI]

NO PROVISION FOR WAIVER OF LATE FEE FOR DELAY IN FILING/NON-FILING OF ST-3 RETURN AS PER RULE 7(C) OF SERVICE TAX RULES,1994. CASE LAW IS APPENDED BELOW{

S.K. ELECTRO ENGINEERS Versus COMMISSIONER OF CENTRAL EXCISE, NAGPUR - 2015 (39) S.T.R. 686 (Tri. - Mumbai)  - 2015 (5) TMI 667 - CESTAT MUMBAI
 

[Ganeshan Kalyani]

Sir, please see the rule mentioned in the show cause notice. In my view penalty is levied as a percentage on the demand amount. If you have mentioned ₹ 20,000/- then it would be late feed. Further penalty is sustainable only when the fault is intentional. As already replied by Sri Kasturi Sir, if your liability is nil then you can take benfit of the circular. Thanks.

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,

Yes, Sir. You are 100% correct. Sh.MARIAPPAN GOVINDARAJAN, Sir in his reply dated 27.5.2016 has also confirmed that there is a difference between late fee and penalty.Both are imposable/chargreable under different rules.The querist should follow this clearly.

AI Summary

Late fee for delayed service tax return applies and can be waived only where gross service tax payable is nil. Late filing of ST-3 returns attracts a structured late fee calculated by delay bands and per-day charges subject to a statutory cap; the late fee is distinct from penalty and is generally payable where service tax liability exists, while waiver is discretionary and typically available only if gross service tax payable is nil.