The following is posted on https://www.cbec.gov.in/st_faq.pdf
"4.8. Is filing of return compulsory even if no taxable service provided or received or no payments received during a period (a particular half year)?
Filing of return is compulsory, even if it may be a nil return, within the prescribed time limit, failing which penal action is attracted."
Now Section 65(7) “assessee” means a person liable to pay the service tax and includes his agent;
AND
Rule 7. Returns.(1 ) 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 months covered in the half-yearly return.
( 2 ) Every assessee shall submit the half yearly return by the 25th of the month following the particular half-year.
AND RULE 7C precribes penalty for delayed filing.
Now the query:
If I am not liable for payment of Tax, then by virtue of Section 65(7), I am NOT an assessee. If I am not an assessee, then filing return under rule 7 does not arise. When I am not liable for filing the return then there is no need to pay any penalty either under Rule 7(C) or Section 77. Is there any flaw in the argument? If at all there is an offence, then it is non-surrender of the registration certificate to the concerned departmental official. Surrendering the registration may also be unenforceable since busines may be there in some years and may not be there and it cannot be justifiable to propose penalty on that count also.
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