MAY 14, 2013

By V Unnikrishnan

AS we know, the e-filing of ST3 returns have become a matter of serious concern for all service tax assesses, after the introduction of negative list from 1 st July, 2012. Of course, it was not a smooth/user friendly scenario ever since its introduction from 1 st April, 2010. Initially, it was made compulsory for all assessees who pay service tax above 10 lakhs tax/CENVAT from April, 2010. From 1st October 2011, e-filing has been made compulsory for ALL service tax assesses, without proper evaluation/assessment of the success of the scheme, started in April, 2010.

The compulsory e-filing was made in a hasty manner; it should have been made optional for some more time.  The changes in the software were all along in experimental stage. The change over from SERMON to ACES also was simultaneous. However, the things went beyond control after the introduction of negative list from 1st July, 2012. After giving extensions for the filing date, finally ST3 return for the period 1st July to September 2012 were filed by almost all assessees on 30th April, 2013.

As per the details given in the CBEC website, http://www.servicetax.gov.in/st-proc-home.htm.

"Para 8.2. The ST-3 Returns can also be got prepared and filed through the ‘Service Tax Return Preparers' (STRPs) who have been duly accredited and authorized by the Department. The Board has issued relevant provisions and guidelines in regard of Service tax Return Preparer Scheme vide Notification No.07/2009-ST dated 03.02.2009 as amended. Currently, there are 1477 STRPs functioning at various locations spread out all across the country. The service tax assesses can log on to  www trpscheme.com. to know the details of the STRPs available in their area."

This is too insufficient to cater the 17 lakh assessees. Thus, the large chunk of assesses find it difficult to avail the services of the STRPs etc. for this work, as they are otherwise busy with their professional work.

Admittedly, the serious matter directly affecting more than 17 lakh service tax assesses was handled in a casual manner by the Authorities in charge of Computerisation in the CBEC. The NIC was initially providing the requisite support service for the Computerisation project with their software SERMON. The NIC officers posted in each Commissionerate had done yeomen services in improvising the software with modification suggested by the field level officers. However, in 2010, all of a sudden, it was discontinued and different agencies were appointed like, HP for the hard ware supply, TCS for data management and Wipro for the software development. Thus the new ACES was brought in which has not been able to sort out the software problems.

It reached the pitiable plight that the Hon'ble FM had to concede in his Budget speech about the miserable state of affairs. FM has admitted the strange statistics that in service tax matters, out of 17 lakh assesses only 7 lakhs are filing returns as per law. The Hon'ble FM has further   stated - "Many have simply stopped filing the returns. We cannot go after each of them. I have to motivate them to file the returns and pay the tax dues". (Is it not an open confession that the dept. has miserably failed in the enforcement of the tax law all these years!!). Announcing a new scheme for Service Tax Voluntary Compliance Encouragement Scheme, 2013,  the Hon'ble FM has stated- ,"I hope to entice a large number of assesses to return to the tax fold. I also hope to collect a reasonable sum of money".

Though the response for this clarion call is to be awaited, the CBEC has hijacked the defects of the software development in the ACES in a different direction .

It was only prudent on the part of the authorities concerned to allow the assessees to file their ST3 returns manually, before the due dates prescribed. Instead, they extended the due date for filing, anticipating that the problems in the software in e-filing can be sorted out successfully. It has never been able to do so, as is evident by now. The latest orders extending/re-fixing the due date for filing ST3 returns for Oct, 2012  to March, 2013 till 31 st August, 2013,  reads as follows:-

"F.No.137/99/2011-Service Tax dated the 23 rd  April, 2013

Order No: 03/2013-Service Tax..

In exercise of the powers conferred by sub-rule(4) of rule 7 of the Service Tax Rules, 1994, the Central Board of Excise & Customs hereby extends the date of submission of the  Form ST-3, for the period from 1st October 2012 to 31st  March 2013, from 25th  April, 2013 to  31st  August, 2013.

The circumstances of a special nature, which have given rise to this extension of time, are as follows:  

"The Form ST-3, for the period from 1st  October 2012 to 31st  March 2013, is expected to be available on ACES around 31st  of July, 2013".

It may be noted that the CBEC is hopeful to make available the ST3 format on ACES by 31 st July, 2013 only. In other words, the CBEC will be taking another TWO more months for this job to make available the ST3 format for the period expired on 31 st March, 2013!!

In this background of affairs, why the CBEC should be so adamant on the compulsory e-filing of the ST3 returns as per rule 7(3) of STRs, 1994? Rather, the manual filing could have been allowed before the due date was duly extended; the data entry work from these returns could have been done in the revised ST3 format by the departmental officers or out sourced agencies (as being done by CBDT). This would have also helped in developing a hassle free, user friendly software for the e–filing of ST3 returns in future. Even now this could be attempted by the authorities concerned, instead of putting the 17 lakh assessees in trouble till 31st Aug, 2013. Simple formats for different type of assessees, like tax fully paid in cash and no CENVAT, those availing CENVAT; having exports etc. could be considered on the lines of different ITR formats being followed by CBDT.

At any rate, it should be made OPTIONAL to choose the manual or e-filing as is made available by the CBDT all these years and even now the e-filing is optional to the "Income tax assesses upto 5 lakh income group". The feasibility of different formats for those who pay the whole tax by cash; those avail CENVAT, those who have exports etc can very well be considered.

Problems can crop up in software developing, still, the number of adversely affected persons should always be ensured to the minimum and if possible, only the departmental persons should be subjected to the ordeal. The CBEC authorities should see to it that the assessees shall never be harassed like this for filing their returns any longer.

(The views expressed are strictly personal.)