The Central Board of Central Excise (“CBEC”) vide the captioned Circular dated June 30, 2015 has issued guidelines for Manual Scrutiny of Service Tax Return ST-3 applicable w.e.f August 01, 2015.

BACKGROUND

CBEC vide Circular dated April 23, 2009 had laid down the procedure for carrying out detailed scrutiny of returns and had circulated a return scrutiny manual for Service Tax. The anti-evasion and audit wings of the Service Tax Department always keep an eye on the defaulters who fails to pay Service Tax and makes default while discharging their statutory liability.

As we all know with the introduction of Point of Taxation Rules, 2011 the liability to pay Service Tax has been shifted from receipt basis to accrual basis. As per the detailed Audit Manual (amended from time to time) issued by the Department regular audit are being conducted. The frequency of audit for tax payers has also been categorised as per norms of payment of Service Tax.

SCOPE OF DETAILED MANUAL SCRUTINY

Since, the small assessees are not audited every year and keep away from audits, therefore, the focus of detailed manual of returns of those assesses who are not being audited. CBEC has issued the captioned circular comprising the check-list & revised guidelines for carrying out detailed manual scrutiny of Service Tax Returns. The salient features of the said circular have been summarised as under:

• To be made effective from August 01, 2015 onwards;

• Focus on small assessees whose total tax paid (Cash + CENVAT) during FY 14-15 is less than INR 50 Lacs. Though on the direction of Chief Commissioner, scrutiny of returns can be made for assessee whose monetary limit exceeds even INR 50 Lacs but in no case such assessees can be subjected to both Audit & manual scrutiny;

• Detailed scrutiny of returns must be conducted by the Service Tax Range headed by the Superintendent;

• Prior intimation of 15 days to be given to assessee in the prescribed format;

• Reconciliation of ST-3 with ITR Returns & Form 26AS and any third party information available;

• Scrutiny process of an assessee should be completed within 3 months

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