Service Tax - Exit - Cancellation more difficult than Registration
DDT 2383 reported about a Superintendent and an Inspector of Service Tax arrested by CBI for accepting a bribe for cancellation of a registration. If you fail in business and want to close shop and surrender the Service Tax Registration Certificate - you will find - it's not all that easy.
Sometime back the Mumbai II Service Tax Commissioner issued a Trade Notice detailing the procedure to be followed for cancellation of registration.
An application for surrender/cancellation of the service tax registration is to be made for following reasons:-
1. Assessee's turnover is below the threshold limit.
2. Change in the constitution of assessee; say from partnership to company or amalgamations.
3. Death of proprietor.
4. Assessee closing down the taxable service business.
5. Assessee has taken centralized registration and hence wants to surrender his other previous multiple registrations pertaining to various branches.
6. Assessee has shifted its office from the jurisdiction of one Division/Commissionerate to another and instead of requesting for change in the location code and premises code of the assessee, a fresh registration has been taken for the new address. Therefore, a need arises for surrender of the old registration.
7. Due to technical error in the system, the assessee has been issued multiple registrations for the same address. In that case, the additional registrations are required to be surrendered.
Assessees who wish to surrender their registration certificates shall file their application on-line using the ACES module on www.ac-es.gov.in. On successful filing of the online application, the assessee shall submit the copies of documents mentioned at para 5 along with signed copy of the printout of the application generated by the ACES System to the jurisdictional Group Superintendent or Superintendent(s) of the Registration Cell in the concerned Divisional office. For, surrendering application, submitted by an assessee who had obtained registration prior to 01.04.2010 and not migrated to ACES, requirement of online filing of application has been done away with.
The assessee who wants to get his registration cancelled is required to submit the following documents:
1. Application Form & Undertaking to surrender the Service Tax Registration.
2. Copies of last six ST-3 returns filed with the department from the date of taking registration till the date of surrender but up to a maximum of last six returns
Where the assessee has not filed ST-3 returns for the period mentioned above, on account of the reasons that the turnover is within the threshold limit of small service providers' exemption then it is not necessary for him to file fresh return for surrender purpose only. He can apply for waiver of penalty under Rule 7C of STR for non-filing of returns. Instructions have been issued for waiver of penalty for non-filing of return where total turnover was less than threshold limit. The fact of non-filing of return should be clearly mentioned in the undertaking.
3. Copies of Profit & Loss account and Balance Sheet from the date of taking registration to the date of surrender, but for a maximum of last 3 financial years only. However, if Balance Sheet or Profit & Loss Statement has not been prepared, the applicant may submit copies of Income Tax Return for the said period. If said return has also not been filed then applicant should provide appropriate evidence like Bank Statement so as to enable the department to verify the reason stated for surrender.
4. Details of Show Cause Notice pending adjudication, details of confirmed demands, details of court cases, details of audit conducted, etc.
In case of cancellation due to death, the death certificate of the proprietor needs to be enclosed along with the application form.
In case of change of constitution the necessary documents like Partnership deed or Articles of Association etc. showing change of constitution may be enclosed along with application for surrender. In case of merger or acquisition necessary documents such as Order passed by the High Court or Article of Association to that effect, may be enclosed alongwith the application of surrender.
After submission of the required documents, the Superintendent concerned may require further information like reconciliation of the income shown in the Profit & Loss Account with the taxable income declared in ST-3 return.
The assessee should submit the required documents with proper indexing of all enclosures. As far as possible all these documents will be verified by the Superintendent or Inspector at the time of its submission itself. In case of any deficiency, the same shall be informed to the assessee at the time of receipt of the documents. It may be noted that if the assessee fails to submit the complete set of hard copies within 15 days of submission of on-line application, it is liable to be rejected.
In case the applicant has taken Service Tax registration prior to 01.04.2010 and has not migrated to ACES system, it is not necessary for such assesses to migrate to ACES for surrendering their registration. They can apply for surrender of registration by a manual application, alongwith other documents as required, without filing the online surrender application. Instructions have been issued to liberally cancel the registration for assessee who had taken registration in the past when there was no threshold limit. Further, in those cases the intimation regarding the cancellation shall be sent by post.
The Superintendent shall process the application for surrender of registration and after successful cancellation of the registration, will inform the assessee through e-mail, and then the assessees can make surrendering application through ACES.
Surrender Application shall be accepted in person between 3.00 to 5.00 PM in the division.
The procedure in other Commissionerates must also be quite simple like this - no wonder nobody comes forward to get registration cancelled.