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01 May, 2013 Ahmedabad :

Lacunas in drafting of Formats and circulars by the Board of Excise and Customs officials has been a regular affair these days. Implementation of Law is more important than framing the same. Board was quick enough to introduce the Negative List based Service Tax to fill their empty buckets with crores of revenue. They planned and implemented Negative list based Service Tax in quick succession but failed to guide how to execute the same. Service Tax return, which is the only means of communication between department and assessee, is an example to show how CBEC failed in proper execution of the new tax regime. Service Tax Return for the quarter July to September 2012 was due to be filed by 25th of October 2012. However, CBEC neither provided utility to file return nor extended date of filing return, rather they just simply forgot the Service Tax return. Cost of forgetting for an assessee is very high where he is penalised even for small failure to comply with the rules but the same rule doesn't apply to Government or field officers who failed to discharge their duties. "Better late than never", CBEC came out with Notification No 1/2013-ST dated 22.02.2013, announcing New ST-3 and date of filing of return.

However, almost after 11 months from Budget 2012, CBEC introduced new Service Tax return form which was required to be filed by 25th of March, 2013 giving mere 30 odd days to an assessee to understand and file new return whereas it took almost more than 11 months for them to come out with new form. Realising their mistake, CBEC again extended date of filing of return from 25th of March, 2013 to 30th April, 2013 vide Order No. 1/2013-ST, dated 6-3-2013.

But drama doesn't ends here. New Service Tax return is not only complex but full of errors. It is not possible for a layman to file his Service Tax return without help of an expert. At the same time even experts felt puzzled as there are lots of confusions in new Service Tax return. After introduction of Negative list based Service Tax only one Service category was put in place, i.e. "other than negative list". However, vide Circular No. 165/16/2012-ST, dated 20-11-2012, and Notification No. 48/2012-ST, dated 30-11-2012, service specific accounting codes and description of different services were restored. However, in new ST-3 assessee is required to fill specific service wise details. Here assessee is required to file their return for the period July to September 2012, and such changes were introduced much later. Hence, CBEC failed to explain what an assessee is required to do when he has paid tax under category other than negative list.

Introduction of partial reverse charge mechanism is also a contentious issue. There are lots of anomalies and confusion as to how to show the same in Service Tax return. Notification No. 30/2012-ST dated 20.06.2012 deals with reverse charge mechanism, to select such notification assessee has to select option "Yes" in the field A11.1. However, field A11.1 asks for information regarding whether the assessee has availed benefit of exemption notification. In no circumstances it can be said that Notification No 30/2012-ST dated 20.06.2012 deals with exemption notification. It is a gross error. There is also no clarification as to what amount to be shown in case of reverse charge mechanism in field B2. There are number of options where an assessee can show partial amount on which tax is required to be paid or even he can reduce rate of Service Tax applicable or he can deduct such amount as other deduction. No clarification so far has been issued by CBEC in this regard.

There is a major difficulty in respect of assessee who has opted to pay tax on receipt basis as per Rule 6(1) of the Service Tax Rules, 1994. Field B1.1 excludes amount taxable on receipt basis where as Field B1.3 requires to fill "Amount taxable on receipt basis under third proviso to rule 6(1) of Service Tax Rules, 1994 for which bills/invoices/challans or any other documents have not been issued". Though assessee is paying Service Tax on receipt basis that does not mean he is not issuing invoices. It is mandatory to issue bill or invoice within specified time as per Service Tax Rules, 1994. So, question may arise for the assessee who is paying Service Tax on receipt basis, as where to show such amount when invoices are issued for such receipts. Hence, word "NOT" is inappropriate and should not form part of field B1.3.

Even after completing mammoth task of filling Service Tax return assessee is not relieved as he will not be able to see the status of return filed, as he will not be able to see the return filed by him under "RET-->View ST3 Return". It is the high time where CBEC needs to come out with clarification and should remove confusion prevailing regarding new Service Tax return. It is true that it is the government who is responsible to impose and collect tax but at the same time it is duty of the Government to educate people about compliance of the same. Mere burdening assessee with more and more complex procedures, it is no way going to help them, instead it will create trust deficit between Government and the assessee. Its Lacuna to its maximum.

Courtesy: From the desk of Monish Bhalla, Founder, www.servicetaxonline.com
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