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Confused Department procrastinates tax returns
17 October, 2012 Ahmedabad :
Confused Department procrastinates tax returns

The English writer and Novelist Arnold Bennett rightly said that "Any change, even a change for the better, is always accompanied by drawbacks and discomforts". It was anticipated that introduction of Negative list in Service Tax provisions would cut down the litigation and smoothen the road map for launch of GST. Although the law makers have been toying with the idea of introducing Negative List based taxation system since more than a year, the extent of their unpreparedness to implement the proposal was evident right from the time when the Negative List system was announced in the Parliament during introduction of Budget 2012. The manner in which Notifications were issued during introduction of Finance Bill, 2012 and thereafter rescinded and replaced with new Notifications after its enactment, reflects the foresight or the lack of it of the law makers. However, the blunders having a peculiar nature of not stopping at one, continued when the Tax Research Unit of Central Board of Excise and Customs (CBEC) issued a Draft Guidance Note at the time of presenting of Budget in the Parliament, and after enactment of the Finance Act, 2012 replaced the same with Guidance Note with a clear disclaimer that the contents therein are not legally binding on the department or on the trade, rendering the value of this note to naught.

Not to be left behind, the implementers of the Service Tax provisions also demonstrated that they possess the very same trait of myopic vision as that of the creators of law.www.hellenbags.com It do not require the brilliance of the great scientist Einstein to realize that the half-yearly returns filed by every assessee by the 25th of the month following the particular half-year, being designed to contain details of defined taxable services, needs modification to suit the recent amendments to the law on account of omission of the definition of individual services. However, even after proposing to replace Negative List based Service Tax system in the place of individual services as far back as in the month of February, 2012, a new format of return was not introduced nor the existing FORM ST-3 modified to suit the necessities of the new law.

This is more so when every assessee registered with the Service Tax department is required to file half yearly returns even if there are no transactions during the half year. From 01.10.2011 onwards it is mandatory for every assessee to file half-yearly returns electronically and any failure to file returns attracts fine.

Although the implementers of the law were fully aware that the Negative List based Service Tax provisions came into operation from 01.07.2012 and the half yearly return in ST-3 form would be relevant only for the period April to June, 2012 when the tax was levied on individual defined services, no efforts were taken to modify the format of return till the issue of Notification No. 47/2012-ST dated 28.09.2012. This Notification stated that only a quarterly return for the period April, 2012 to June, 2012 would be required to be submitted by the 25.10.2012. The scramble of the assessee intending to conclude the filing of returns at the earliest so that the due date is not missed, was cut short when the website of the CBEC was found displaying the message "All Service Tax assessees will not be able to file ST 3 returns in ACES now and have to wait until the modified version of ST 3 Form is made available in a few weeks".

The confusion was further compounded when even in the month of October, 2012 the website continued to display the message that the modified ST-3 Form will be available in a few weeks. The height of unpreparedness of the department implementing the Service Tax provisions was displayed in full vision when the CBEC vide Order No. 3/2012 issued on 15.10.2012 extended the date of submission of the return for April, 2012 to June, 2012 to 25.11.2012. This Order clarified that the ACES (website of CBEC) will start releasing the return in Form ST3 in a quarterly format, shortly before the old due date of 25.10.2012. Although this extension of time limit has calmed the nerves of the assessee, the silence of CBEC on the format or date of filing of returns for subsequent period has left them high and dry.

If department which is empowered to implement the new law themselves are confused and are not able to create proper infrastructure for smooth enforcement of the law, the plight of the poor assessee who are ill equipped to deal with new procedures of the law do not need further emphasis. The delay caused by CBEC in introducing new format for Service Tax returns would be forgotten over a period of time since such delay would not attract any fine or penalty, would the department be equally benevolent to condone any delay in filing of such returns in the new format by the assessee. This is more so when both the delays are caused on account of the confusion created by the new provisions in Service Tax.

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