Service Tax under Seection 68(1)

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PRAKASH MENON (Querist)
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21 November 2022 Dear Sir,
We are in receipt of SCN from GST department that why we have not paid Service tax for the year 2016-17 and 2017 Till June 2017. We are into transport buisness , providing truck for lifting containers from the yard of the customers , whose goods were being imported from overseas.
Our C.A has filed Nil returns for these period, under the coloumn Service provider under section 68(1).
Also we are showing our invoices which is mentioned Service tax payable by the consignee.
Please let me know whether this is correct method, and please advice whether we have any liability of paying Service tax from our end.
Please reply back at the earleist.
Thanks
Prakash Menon

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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11 July 2024 Dear Prakash Menon,

Thank you for reaching out regarding the Service Tax Notice from the GST department concerning the period from 2016-17 to June 2017. Based on your description of your business as a transport service provider, here’s an overview of the situation and advice on the correct approach:

### Understanding the Situation:

1. **Nature of Business**: You provide trucking services for lifting containers from customers' yards, where the goods are imported from overseas.

2. **Filing Nil Returns**: Your Chartered Accountant (C.A.) has filed Nil returns under Section 68(1) of the Service Tax Act for the mentioned periods.

3. **Invoices and Service Tax Liability**: Your invoices indicate that service tax is payable by the consignee (recipient of the service).

### Clarification on Service Tax Liability:

1. **Reverse Charge Mechanism (RCM)**: In the case of transport of goods by road, the liability to pay service tax generally falls under the reverse charge mechanism. This means the liability to pay service tax shifts from the service provider (you) to the service recipient (consignee), who is the importer in this scenario.

2. **Correct Methodology**:
- **Nil Returns**: Filing Nil returns under Section 68(1) is appropriate if your services are subject to reverse charge and you have not provided any taxable services during the period in question.
- **Invoice Details**: It is correct to mention on your invoices that service tax is payable by the consignee, as per the provisions of the Service Tax Act.

### Response to the SCN:

1. **Review of SCN**: Carefully review the Service Tax Notice (SCN) received from the GST department to understand the specific allegations and demands.

2. **Documentation and Evidence**: Gather all relevant documents such as invoices, agreements, and Nil return filings to support your position.

3. **Engage with CA**: Consult with your Chartered Accountant to prepare a detailed response to the SCN. Include explanations on the applicability of reverse charge mechanism and filing of Nil returns.

### Action Steps:

1. **Respond to SCN**: Prepare and submit a comprehensive response to the SCN within the stipulated time frame. Clearly outline that your business operates under the reverse charge mechanism and Nil returns have been filed as per applicable law.

2. **Compliance Going Forward**: Ensure ongoing compliance with GST regulations, including proper invoicing and documentation of services subject to reverse charge.

3. **Seek Professional Advice**: If needed, seek further advice from your Chartered Accountant or a tax consultant to handle any complexities or disputes effectively.

### Conclusion:

Based on the information provided, filing Nil returns and indicating service tax payable by the consignee on your invoices appear to be appropriate practices. However, responding to the SCN with detailed explanations and supporting documents is crucial to resolve the matter satisfactorily.

If you have any further questions or require assistance in preparing your response, please do not hesitate to contact us promptly.

Best regards,

[Your Name]
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