Requirement of filling Service Tax Returns by Small Service Providers

We all are well familiar with the ever green contest between the Revenue and the Assessee,be it a taxing issue or an issue of relief. The learned officials of the Department are issuing Show Cause Notices to the Small Service Providers of nonfilling of Service Tax Returns. My point of consideration in this discussion is whether Small Service Providers having turnover below the threshold limit Rs. 10 Lacs and also below Rs. 9 Lacs (the limit prescribed for obtaining registration even if the turnover is below the threshold limit) are at all required to file the service tax return?

In my considered opinion, the Service Providers having taxable turnover less than the threshold limit Rs. 10 Lacs,and also less than the prescribed limit Rs. 9 Lacs who otherwise comply with the conditions of exemption notification are not required to file the service tax return.

Only the following four types of persons are required to file the Service Tax Returns

1. ‘Persons liable to pay tax

2. ‘Input Service Distributors

3. ‘Small Service Providers whose aggregate value of taxable service exceeds a prescribed amount, (then Rs. 3 Lacs, now it is Rs. 9 Lacs)

4. ‘the service recipients wherever liable to pay service tax on reverse charge basis.

Who is liable to file service tax return?

Liability to file return is on the persons who are liable to pay tax or who have otherwise been specifically made liable to obtain registration and file service tax returns.

Liability to file Service Tax Return is cast upon the Person Liable to Pay the Service Tax vide Section 70 and Rule 7(1).

Liability to obtain compulsory registration and filling of service tax return is determined by Section 69(2), Section 70(2) and Notification No. 26/2005 as amended up to the date.
For ready reference, relevant provisions of Section 70(1), Rule 7(1), Section 70(2) and Section 69(2) are reproduced here:

Section 70(1) of the Act;

Every person liable to pay the service tax shall himself assess the tax due on the services provided by him and shall furnish to the Superintendent of Central Excise, a return in such form and in such manner and at such frequency and with such late fee not exceeding twenty thousand rupees, for delayed furnishing of return, as may be prescribed.

Rule 7(1) of the Service Tax Rules, 1994;

Every Assessee shall submit a half yearly return in Form ST-3 or ST-3A, as the case may be, along with a copy of the Form TR-6, in triplicate for the moths covered in the half-yearly return.

Section 70 (2) of the Act

The person or class of persons notified under sub-section (2) of section 69, shall furnish to the Superintendent of Central Excise, a return in such form and in such manner and at such frequency as may be prescribed.

Section 69(2) , Persons notified for filling of service tax return The Central Government, exercising the powers conferred under Section 69(2), issued a Notification bearing No. 26/ 2005-ST on 7-6-2005 specifying that; any input service distributor and service provider of taxable service whose aggregate value of taxable service in a financial year exceeds Three Lacs Rupees to make an application for Registration.

Turnover limit for obtaining Service Tax Registration was raised from Rs. 3 Lacs to Rs. 7 lacs and Rs. 9 Lacs respectively by subsequent amendment notification to the original 26/2005 by notification nos. 05/2007 dated 01-03-2007 effective from 01-04-2007 and 9/2008 dated 01-03-2008 effective from 01-04-2008.

This Notification made it incumbent upon every input service distributor and every provider of Taxable Service with its turnover of more than Rs. 3 Lacs Rupees (now Rs. 9 Lacs) to obtain registration under the Act, even if he/she is not otherwise liable to pay Service Tax (the Turnover of Taxable Service being less than Rupees 4 Lacs, now Rs. 9 Lacs).