SCN ISSUED FOR EXTENDED PERIOED, Service Tax

[Vinod jadhav]

An SCN (Show Cause Notice) was issued for the Financial Year 2014-15 on September 20, 2020. The SCN was issued due to a mismatch between the 26AS and ST-3 return.

The assessee has filed a NIL ST-3 return and has not recovered any service tax from the customers.

My question is, whether the period from April to September 2014 is already time-barred?

Can the department invoke the extended period in this case?

Posts / Replies

[KASTURI SETHI]

Dear Querist,

When was ST-3 return filed for the period from April, 2014 to Sept., 2014 ?

Date of ST registration ?

 

[Amit Agrawal]

Some pointers in such matters:

A. Mere non-recovery of service tax from client/s can not be valid reason for non-payment of service if same was otherwise due & payable.

B. Mere difference between turnover as per Form 26AS and ST-3 return - by itself - is not sufficient reason to invoke extended period to issue SCN. It is burden on Revenue to prove that there was suppression of facts with intention to evade taxes, fraud etc. on part of tax-payer so as to invoke extended period to issue SCN.

C. Generally specking, Revenue ought to carry out due scrutiny / investigation before issuing such SCN.

D. You will find many case-laws which are getting regularly reported on such type of SCNs and many of them are against Revenue.

E. Above views should be seen from limitations of non-knowing the contents of SCN, reason for non-payment of service tax, grounds of defenses taken both on merits of the case & limitation.

F. In such matter, taking a professional expert's help & assistance in preparation of reply to SCN, appeal etc. can make lot of difference.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Shilpi Jain]

Agreed. Many of the SCNs with this kind of mismatch allegation and posing a demand have been set aside due to not being able to allege exactly the service being provided.

Its like a shot in the dark. Do take professional help to fight out this notice in which you can also counter the invocation of extended period of limitation.

[KASTURI SETHI]

Here is a case law on the issue in favour of the assessee.

2022 (8) TMI 704 - CESTAT KOLKATA -  BALAJEE MACHINERY Versus COMMISSIONER OF CGST & EXCISE, PATNA-II

Reply to my query to examine the time bar aspect on an other factor.

[Vinod jadhav]

Respected sir,

Below is the date of ST-3 and Registration date.

When was ST-3 return filed for the period from April, 2014 to Sept., 2014 ?

: 30.11.2014

Date of ST registration ?

: 21.08.2013

[KASTURI SETHI]

Sh. Vinod Jadhav Ji,

As per Board's Master Circular, a person whose turnover was NIL (exempted) was not required to file ST-3 return. This is Master Circular and Board's circulars are binding on the department as per the judgement of the Supreme Court. There is a plethora of case laws where the Apex Court and various semi-judicial courts had held to this effect. So take the shelter of above Circular and case laws and fight the case on time bar ground in addition to the judgements on issuance of SCN without investigation.

 

6. Service tax return :

6.1 The service tax return is required to be filed under Section 70 of the Act read with Rule 7 of the Rules, by ‘any person liable to pay the service tax’. This return is required to be filed on a half yearly basis, in Form ST-3. For the periods from April to September and October to March, it must be filed by the 25th October and the 25th April respectively. Further, ‘Input Service Distributor’ is also required to file this return. Persons who are not liable to pay service tax (because of an exemption including turnover based exemption), are not required to file ST-3 return

(2) An SCN is invalid and lame if issued without complete investigation. Otherwise also, the SCN must have been issued before 29.11.2019, the date on which ST-3 return was filed as per the Explanation-2 (6) (a) of 'relevant date' under Section 73 of the Finance Act.

Explanation-2 (6)(a) of Section 73 of the Finance Act, 1994

(a) where under the rules made under this Chapter, a periodical return, showing particulars of service tax paid during the period to which the said return relates, is to be filed by an assessee, the date on which such return is so filed;

Hope you will be successful.

Hope you

 

[KASTURI SETHI]

In continuation of above,

Corona virus attacked India in March, 20 and lockdown was enforced from 22.3.2020.

Hence not covered by Extension period granted by various Supreme Court Orders and Notification issued by Govt. due to Covid in this context.