Annual Returns under Service Tax (Finance Act 1994)

The Finance Act 2016 has made annual service tax return filing mandatory by 30th
November of the financial year ending on 31st March. This provision shall be applicable from
Financial Year 2015-16 i.e first annual return shall be filed on 30th November 2016. The basic
purpose of introducing the annual return is to reconcile the information disclosed in the half yearly
service tax returns and the audited annual financial statements of the assessee for the financial year
ending on 31st March.
It was usually seen that the department was facing problems in reconciling the figures
mentioned in the audited profit and loss account and the service tax returns filed by the assessee.
Since the last date for filing of service tax return for the half year ending 31 st March is 25th April and
for financial statements is 30th September, usually some differences were found between them In
such a scenario where the adjustments are made in the audited financial statements, the
department failed to assess the real service tax liability. In order to remove such confusion, the law
has been amended to provide for submission of annual returns by 30th November. Effectively 2
months have been provided after the finalization of audited balance sheet.
Annual Return under Service Tax is not a new concept. It has been adopted from the Central
Excise Law where an annual return is presently filed by the assessee. It is merely a certified
reconciliation statement by the chartered accountant where the figures shown in the financial
statements and the service tax returns shall be reconciled. CA would certify reasons for the
difference between the two figures. The usual reasons for the difference between the figures could
arise due to:
1.
2.
3.
4.
5.

Point of Taxation Rules 2011

Place of Provision Rules
Cenvat Credit Rules, 2004
Any new/amendment to Notifications under Service Tax Law
Provisions and adjustments in the financial statements.

The department has not yet certified a particular format for the annual return, but as per the
studies we have made the format would be more or less in the shape of reconciliation statement to
be certified by a practicing Chartered Accountants.
The onus of such certification shall lie upon the Chartered Accountant and he/she may be held
party in default for suppression of facts or faulty reconciliation. Although it may prove to be
opportunity for the professionals but at the same time it is to be ensured that thorough study of the
provisions should be done in order to prepare true and correct reconciliation statement.
For any further queries do contact the undersigned.
Regards
Keshav R Garg
(B.Com, CA, CS, ISA(ICAI))
3328, Sector 27 D, Chandigarh, India 160 019
Ph: +91-172-461-3328
+91-172-265-3338
Mob: +91-98880-90008
Mail: mygst.mytax@gmail.com