SERVICE TAX LIABLITY ON CRICKTERS

The central government has introduced the concept of Negative List w.e.f. 01-07-2012, under which all persons providing any SERVICE which is not covered under the Negative List (Sec. 66 D) or Mega Exemption Notification (Notification No. 25/2012 dated 20-06-2012) shall be liable to pay Service Tax, subject to an exemption of the Threshold Limit of Rs. 10 Lakhs (Notification No. 33/2012 dated 20-06-2013).

Frequently Asked Questions:-

 FAQ 1: What is considered as a Service, under the Service Tax?

Ans. 1: Service [As per section 65 B (44)] means any activity carried out by a person for another for a consideration, and includes a declared service.

 FAQ 2: Is the services provided by a Player, coach, referee, umpire or a team manager for participation in a sporting event organized by BCCI considered as a Service under the ‘Service Tax’

Ans. 2: YES

 FAQ 3: Is this service covered under the Negative List?

Ans. 3: NO

 FAQ 4: Is there any relief for sportsman under the Mega Exemption Notification?

Ans. 4: Following exemptions are provided under the Mega Exemption Notification for sportsman:-

PARA 8: Services by way of training or coaching in recreational activities relating to arts, culture or sports;
PARA 10: Services provided to a recognised sports body by-(a)  an individual as a player, referee, umpire, coach or team manager for participation in a sporting event organized by a recognized sports body;(b)another recognised sports body;

 FAQ 5 : If a person is a coach or trainer associated with BCCI on contract, will he be covered under PARA 8 of the Mega Exemption Notification?

Ans.5 : NO – The important point of consideration in para 8 is that the coaching/ training should be for recreational purpose and not for any professional development. Whereas the coaches attached with BCCI or affiliated bodies are training professionals and not leisure seekers.

 FAQ 6: Whether BCCI is a recognized sports body for coverage under Para 10 of the Mega Exemption Notification?

Ans. 6 : A ‘Recognised Sports Body is defined at S. No.(za) of Para 2 of Mega Exemption Notification. The critical areas for consideration are as below:-

S. No.	Qualification for a Recognised Sport Body	Whether BCCI Qualifies under the Criterion	Remarks	Impact
1.	The Indian Olympic Association	No	-	-
2.	Sports Authority of India	No	-	-
3.	A National Sports Federation (NSF) recognised by the Ministry of Sports and Youth Affairs of the Central Government, and its affiliate federations	No	BCCI has not been recognised as a National Sports Federation for the year 2013: LIST OF NATIONAL SPORTS FEDERATIONS	-
4.	National Sports Promotion organizations recognised by the Ministry of Sports and Youth Affairs of the Central Government	No	-	-
5.	The International Olympic Association or a federation  recognised by the International Olympic Association	No	Although ICC is recognised by IOA but this is not applicable on its affiliated associations	-
6.	A federation or a body which regulates a sport at international level and its affiliated federations or bodies regulating a sport in India	Yes	ICC is an international federation which regulates cricket and BCCI is its affiliates federation/ body regulating cricket in India.	It will cover only BCCI and not its affiliated federations

FAQ 7: Which payment received by a player, referee, coach, umpire and a team manager are covered under the Para 10 of the Mega Exemption Notification? Ans. 7 : Details of coverage and non-coverage is discussed as below:-

S. No.	Nature of Payment	Coverage under Para 10 of Mega Exemption Notification
A.	Match Fees for participation in any sporting event	Covered
B.	Annual Contract Fees as a team member	Covered
C.	Prize Money for Extraordinary Performance	Not Covered
D.	Annual Share in Profit	Not Covered
E.	Receipts from Endorsements and Advertising Contracts	Not Covered
F.	Receipts as Brand Ambassadors	Not Covered
G.	Receipts for participating in various events like award functions, hotel inauguration etc	Not Covered

FAQ 8 : What was the position prior to 01-07-2012?
Ans. 8:  Prior to 01-07-2012 services listed under para 1 to 4 of the Ans. 7 above were non taxable for all sportsman including BCCI and its affiliated federations. However, Endorsements, Sponsorships, Event Participation fees etc were taxable even before 01-07-2012.

 FAQ 9: What is the suggestion for a player associated with BCCI or its affiliated federation – who has not got himself, registered till date and has been receiving taxable revenue from BCCI or its affiliated federations?

Ans. 9:  The player should apply for registration under Service Tax to cover there liability w.e.f. 01-07-2013.In order to save the interest and penalties for delays in registration, payment of taxes and filling of returns upto 31-12-2013 – A declaration should be made under the Service Tax Voluntary Compliance Encouragement Scheme, 2013.

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Nil Service Tax Return Not Mandatory

No Need to file Service Tax return (ST-3) when no service is rendered during the relevant period and even not required to opt for VCES

We are sharing with you an important judgement of the Hon’ble Kolkata Tribunal  in the case of M/s Suchak Marketing Pvt Ltd Vs. Comm. of Service Tax, Kolkata [2013 (6) TMI 641] and detailed analysis on following issue:

Issue:

Whether Service provider is required to file Service Tax Return where no service is rendered?

Facts of the case:

M/s Suchak Marketing Pvt Ltd (“the Assessee“ or “Suchak”) is registered under the taxable service category of constructions in respect of commercial or industrial building and civil structure services under Chapter V of the Finance Act, 1994 (“the Finance Act”).

During the period April, 2005 to March, 2008 the Assessee has not provided any service and also has not filed Service Tax Return. However the Assessee filed six “Nil” belated Service tax return for the period September, 2005 to March, 2008 on November 18, 2008.

Thereafter the Department issued a show cause notice proposing to impose penalty under Rule 7C of the Service Tax Rules, 1994 (“the STR”) and Section 77 of the Finance Act.  The Adjudicating Authority vide the Order-in-Original ordered the Assessee to pay Rs. 12,000/-for each ST-3 Return under Rule 7C of STR for late filing of Service Tax Return and also imposed penalty of Rs. 2,000/- under Section 77 of the Finance Act.

Subsequently, the Assessee against the Order-in-Original filed an appeal before the Commissioner (Appeals). The Commissioner (Appeals) confirmed the late fee of Rs.12, 000/- under Rule 7C of STR and dropped penalty under Section77 of the Finance Act.

Hence the Assessee filed the present appeal before the Hon’ble Tribunal challenging levy of late fee on the ground that it had not provided any services during impugned period and thus was not required to file service tax return.

Held:

The Hon’ble Tribunal waived penalty under Rule 7C of the STR and set aside order of the Commissioner (Appeals) relying on the Central Board of Excise and Customs (“the CBEC”) Circular No.97/8/07-ST dated August 23, 2007 and judgment of the Tribunal in the case of Amrapali Barter (P.) Ltd. Vs. CST [2013-TIOL-32-CESTAT-KOL] (“Amrapali Barter Case”).

The Hon’ble Tribunal observed that even in terms of Rule 7C of the STR in case of filing of NIL returns, the Assessing Officer has discretion to waive late fees for filing of ST-3 returns. Further the Tribunal observed that this is a fit case to invoke proviso to Rule 7C of the STR and waived late fees, relevant proviso of Rule 7C of the STR is as under:

“Provided also that where the gross amount of service tax payable is nil, the Central Excise officer may, on being satisfied that there is sufficient reason for not filing the return, reduce or waive the penalty.”

The relevant extract of the Circular and Amrapali Barter Case are as under for the ease of your reference:

The Circular:

“6. ….Persons who are not liable to pay service tax (because of an exemption including turnover based exemption), are not required to file ST-3 return.”

In Amrapali Barter Case, the Service provider is registered with the Service Tax Authorities and has not provided any services during a particular return cycle and was also not liable to pay any service tax during that return cycle. The Hon’ble Tribunal has held that the service provider is not required to file the Service Tax Return (even nil return) for that period as per the CBEC Circular No 97/8/07-ST dated August 23, 2007.  Further the Hon’ble Tribunal held that in case the Service Provider files the nil return after considerable delay, then also no penalty under Section 77 of Finance Act or fees under Rule 7C of the STR imposable on him. Hence such case is fit for invocation of the proviso to Rule7C and grant waiver of late filing fees.

Related open Query in the light of Service Tax Voluntary Compliance Encouragement Scheme, 2013 (VCES):

The TRU (CBEC) has issued a recent Circular No. 170/5 /2013 – ST dated. 08-08-2013 to provide clarification on stated query:

Query:             Whether a person, who has paid service tax for a particular period but failed to file return, can take the benefit of VCES Scheme so as to avoid payment of penalty for non- filing of return?

Clarification:  Under VCES a declaration can be made only in respect of “tax dues”. A case where no tax is pending, but return has not been filed, does not come under the ambit of the Scheme. However, Rule 7C of the Service Tax Rules provides for waiver of penalty in deserving cases where return has not been filed and, in such cases, the assessee may seek relief under Rule 7C.

Way forward:

Assessee, who has paid service tax for a particular period but failed to file service tax return, can be relieved on following ground:

·           Persons who are not liable to pay service tax (because of an exemption including turnover based exemption), are not required to file ST-3 return in terms of Circular No.97/8/07-ST dated August 23, 2007 and cited judgement.

·           Even if service tax return is filed late/ failed to file return – No Penalty in terms of Rule 7C of the STR.

Something to cheer……..enjoy.

Hope the information will assist you in your Professional endeavors. In case of any query/ information, please do not hesitate to write back to us.

 Released a Book - "Guide to Service Tax Voluntary Compliance Encouragement Scheme, 2013", authored by Bimal Jain, FCA, FCS, LLB

Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the authors nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this document nor for any actions taken in reliance thereon.

Readers are advised to consult the professional for understanding applicability of this newsletter in the respective scenarios. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. No part of this document should be distributed or copied (except for personal, non-commercial use) without our written permission.

Thanks & Best Regards.

Bimal Jain
FCA, FCS, LLB, B.Com (Hons)

Mobile: +91 9810604563
E-mail: bimaljain@hotmail.com

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ST return not to be filed by service provider if no service tax is payable

ST : If no service is rendered by service provider, there is no requirement to file ST-3 Returns, as he is not liable to pay any service tax

[2013] 35 taxmann.com 360 (Kolkata - CESTAT)

CESTAT, KOLKATA BENCH

Suchak Marketing (P.) Ltd.

v.

Commissioner of Service Tax, Kolkata*

DR. D.M. MISRA, JUDICIAL MEMBER

ORDER NO. A/24 (KOL.) OF 2013 
APPEAL NO. ST/393 OF 2012

FEBRUARY  5, 2013 

Section 70 of the Finance Act, 1994 read with rule 7C of the Service Tax Rules, 1994 - Furnishing of returns - Assessee, a construction service provider, having registration under service tax, filed six NIL returns in Form ST-3 form for April, 2005 to March, 2008 on 18-11-2008 - Department sought levy of late fees under rule 7C of the Service Tax rules, 1994 and penalty under section 77 of the Finance Act, 1994 for such belated filing - Commissioner (Appeals) upheld levy of fees under rule 7C, but, dropped penalty - Assessee challenged levy of fees on ground that it had not provided any services during impugned period and it was not required to file any return - HELD : As per Circular No. 97/8/07-ST, dated 23-8-2007, if no service is rendered by service provider, there is no requirement to file ST-3 Returns - Further, even as per rule 7C, in case of filing of NIL returns, Assessing Officer has discretion to waive late fees for filing ST-3 returns and this is a fit case to invoke proviso to rule 7C and waive late fees - Hence, late fees levied under rule 7C ibid was set aside [Para 5] [In favour of assessee]

Circulars and Notifications : Circular No. 97/8/07-ST, dated 23-8-2007

EDITOR'S NOTE

1. Circular : As per para 6 of the Circular No. 97/8/07-ST, dated 23-8-2007, —

♦		The Service Tax return is required to be filed under section 70 of the Act read with rule 7 of the Rules, by 'any person liable to pay the Service Tax'.
♦		Persons who are not liable to pay service tax (because of an exemption including turnover based exemption), are not required to file ST-3 return.

2. Sections 69 and 70 of Finance Act, 1994, Rule 7C of Service Tax Rules, 1994 and Rule 9 of CENVAT Credit Rules, 2004 : The view expressed in circular is unexceptionable, but, that would not mean that a person, who is liable to pay service tax but has NIL service tax payable during a particular period, would stand absolved from this requirement. Form ST-3 is also required to be filed under rule 9 of the CENVAT Credit Rules, 2004 specifying Cenvat credit balance/details.

Even section 69 dealing with registration, makes every person liable to pay service tax to seek registration. Rule 4 of the Service Tax Rules, 1994 provides for surrender of registration certificate when the person liable to pay service tax ceases to be so liable. Therefore, registration certificate must be surrendered when a person doesn't expect himself to be liable to pay service tax anymore or at least, for a long duration.

Even if no services have been provided during a particular half-year, every person liable to pay service has to submit a return. Owing to NIL services provided, the return shall be NIL return. However, it may contain other details as regards CENVAT Credit taken, services received under reverse charge, etc.

If a person continues to have Cenvat balance, the Department expects filing of return under rule 9 of CENVAT credit Rules, 2004. Probably, the matter was not argued from that angle.

The fact that proviso to rule 7C provides for waiver of late fees in case of NIL return, also proves that law foresees filing of NIL return; otherwise the provisions of rule 7C would be rendered, rather, otiose.

The assessees should be cautious and should not blindly take shelter of this judgment.

CASES REFERRED TO

Amrapali Barter (P.) Ltd. v. CST [Order Nos. A-879-880 (Kol.) of 2012, dated 14-12-2012] (para 5).

A.K. Biswas for the Appellant.

ORDER

1. This is an appeal filed by the appellant against the Order-in-Appeal No. 146/ST/Kol/2012 dated 7-5-2012 passed by Commr. of Central Excise (Appeals), Kolkata.

2. Briefly stated facts of the case are that the appellants are engaged in providing the taxable services under the category of construction in respect of commercial or industrial building and civil structure services. For rendering the said services, the appellants were registered with the service tax Department. The appellants had filed six nil returns in ST-3 form for the period from September, 2005 to March, 2008 on 18-11-2008. Consequently, show-cause notice was issued to them proposing penalty 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 also imposed penalty of Rs. 2,000/- under Section 77 of the Finance Act, 1994 against the appellant. Aggrieved by the same, the appellant had filed appeals before the ld. Commissioner (Appeals). The ld. Commissioner (Appeals) dropped the penalty under Section 77 of the Finance Act, but confirmed the penalty of Rs.12,000/- against the appellant under Rule 7C of Service Tax Rules. Hence the present appeal.

3. None present for the appellant in spite of notice of hearing having been sent to them well in advance.

4. The ld. A. R. appearing for the Department, has reiterated the findings of the Id. Commissioner (Appeals) and submitted that the ld. Commissioner (Appeals) has already dropped the penalty under Section 77 of the Finance Act, 1994. Therefore, there is no reason to waive the late fees directed to be paid under Rule 7C of the Service Tax Rules, 1994.

5. Heard the Id. A.R. for the Department and perused the records. Undisputedly, the appellants were registered with the service tax Department for providing taxable services. It is also not in dispute that during the period April, 2005 to March, 2008, they have not provided any service and also they have not filed any returns with the Department. They have filed six ST-3 Returns belatedly on 18-11-2008. I find that in view of the Board's Circular No.97/8/07-ST, dated 23-08-2007, in the event, no service is rendered by the service provider, there is no requirement to file ST-3 Returns. The ld. A.R. could not produce anything contrary to the said Circular. Besides, I find that as per Rule 7C of the Service Tax Rules, in the event, nil returns are filed, the Assessing Officer had the discretion to waive the late fees for filing the ST-3 Returns. In my view, it is a fit case to invoke the proviso to Rule 7C and waive the late fees relating to the nil returns filed by the appellant during the period April, 2005 to March, 2008. A similar view has been held by this Tribunal in the case of Amrapali Barter (P.) Ltd. v. CST [Order No.A-879-880/Kol/2012, dated 14-12-2012]. In these circumstances, the order of the ld. Commissioner (Appeals) is set aside and the appeal filed by the appellants is hereby allowed. Appeal is allowed.

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Download Excel Utility of Service Tax Return ST-3 for October 2012 to March 2013

Offline Excel utility for filing half-yearly Service Tax return (ST 3) for the period 1st October, 2012 to 31st March, 2013 is now available on below link of 
ACES Website.

http://acesdownload.nic.in/Documents/ACES-EFiling-ST3_Oct-Mar_2013.zip  

The last date of submission of the ST-3 return for the period, Oct. 2012 - Mar. 2013 has been extended up to 31st August, 2013 as per CBEC Order No. 3/2013 - Service Tax dt. 23-4-2013. In order to avoid Last Minute congestion and inconvenience you arehereby advised to start e-filing the returns immediately and not to wait till the last date.

The status of the XML file of ST-3 return uploaded by the assessee can be ascertained after Next Day (one business day) of uploading the return by accessing 'RET > e-filing > view XML status'.

In case of any difficulty in accessing or using the ACES Application, assessee can seek help of the ACES Service Desk by sending e-mail to aces.servicedesk@icegate.gov.in or calling up national toll-free number 1800 425 4251 on any working day from Monday to Friday between 9 AM and 7 PM and on Saturdays from 9 AM to 2.30 PM.

Dealer Return - Instructions to mention IEC code in return click here New Assessee - Procedure for registration with ACES click here Existing Assessee - Procedure for Registration with ACES using TPIN link click here Account Blocked - Procedure To Reset Password click here Service Tax Excel Utilities Last Updated XML Schema Last Updated Download ST3 Return Excel Utility (For Filing ST-3 returns for the period upto Oct-Mar 2011) 18-01-2013 Download XML Schema for ST3 Return 06-04-2012 Download ST3 Return Excel Utility (For Filing ST-3 returns for the Quarter April-June 2012) 18-01-2013 Download XML Schema for ST3 Return 22-10-2012 Download ST3 Return Excel Utility (For Filing ST-3 returns for the Quarter Jul-Sep 2012) 29-04-2013 Download XML Schema for ST3 Return 29-04-2013 Download ST3 Return Excel Utility (For Filing ST-3 returns for Half Year Oct-Mar 2013 onwards) 31-07-2013

Tags: Download Excel Utility of Service Tax Return ST-3 for October 2012 to March 2013, Download Service Tax Return Oct-12 to Mar-13 Excel Software, Excel Utility of Service Tax Return ST-3 for October 2012 to March 2013

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What are the steps for preparing and filing of service tax returns

ONLINE MODE:

Returns can be prepared and filed on line by selecting the ‘Fill ST-3’ option under RET module after logging into the ACES.

All validations are thrown up during the preparation of the return in this mode and the status of the return filed using the online mode is instantaneously shown by ACES.

OFF LINE MODE:

Returns can also be prepared and filed off-line. Assessee downloads the Offline return preparation utility available at http://www.aces.gov.in (Under Download)

Prepare the return offline using this utility. The return preparation utility contains preliminary validations which are thrown up by the utility from time to time.

PROCEDURE TO UPLOAD

·         Assessee logs in using the User ID and password.

·      Select RET from the main menu and upload the return. Instructions for using the offline utilities are given in     detail in the Help section, under ‘Download’ link and assessees are advised to follow them.

·  Returns uploaded through this procedure are validated by the ACES before acceptance into the system        which may take up to one business day. Assessee can track the status of the return by selecting the appropriate option in the RET sub menu. The status will appear as “uploaded” meaning under process by ACES, “Filed” meaning successfully accepted by the system or “Rejected” meaning the ACES has rejected the return due to validation error. The rejected returns can be resubmitted after corrections.

·      Once the Central Excise returns are filed online in ACES or uploaded to the system using the off-line utility, the same cannot be modified or cancelled by the assessee, except by filing of revised return.

Validation of the entries made while filling return

1.   At the time of making entry in the electronic format of the relevant return, the software does some preliminary validation for ensuring correctness of data, either concurrently or at the time of saving / submitting the return. This validation process is automated. The user is prompted by the application software to correct the particulars entered wherever required. In respect of certain entries, although the application alerts the assessee about any entry found erroneous or inconsistent, as per the automated validation process, the assessee is still allowed to proceed further to complete data entry of the return and finally submit it electronically. But in some cases the assessees are not allowed to proceed further unless the error indicated is corrected.

2.   A return filed electronically is subject to automatic verification process by the application and defective returns are marked to the departmental officer for review and correction. While reviewing the return the officer may seek some clarification from the assessee, call for some information, records or documents which should be furnished by the assessee. In case of review and correction of returns by the departmental officers, assesses will receive a message from the application and they can log in to the application to view the reviewed returns online.

3.   Returns, captured off-line using the Downloadable utility and uploaded later on, are further subjected to certain validation checks. Processing of uploaded returns, using the off-line versions, is done at the end of one business day and the status can be viewed by the assessees under the ‘VIEW STATUS’ link under ‘RET’ module. Status is described as ‘UPLOADED’, ‘FILED’ or ‘REJECTED’ and they denote as follows:

·         UPLOADED denotes that return is uploaded and under processing (assessees are advised to  view the status after the end of a business day).

·         FILED denotes that uploaded return is accepted by system.

·         REJECTED denotes that return is rejected due to errors. (The assessees are required to correct the return and upload it again.)

4.   There is no provision in ACES application to allow assessees to make corrections to the returns filed by them. Once the return is accepted by the system as successfully ‘filed’, no modification can be made by the assessee. However, if the return is rejected, the assessee can correct the errors and upload it again. The assessees are, therefore, advised to take utmost care while fill-in in the returns. They may, however, bring it to the notice of the departmental officers.

Acknowledgement of E-Filing of the return 

In the case of a Service Tax return filed on-line, ACES application software acknowledges it by displaying an Acknowledgement message. A unique document reference number is generated which consist of 15-digit registration number of the assessee, name of the return filed, the period for which return is filed etc. This is also automatically communicated to the email id of the assessee by the application. In the case of an uploaded Central Excise return, using offline utility, similar acknowledgement is generated and sent after the acceptance of the return by the system as a valid return i.e. when the status changes to ‘FILED

This Article is written by CMA Samir Biswal. He can be reached at cmasamirbiswal@gmail.com.

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