Time of Show cause notice, Service Tax

[Vijesh Jaiswal]

Dear Sir,

Kindly reply my query and advice:

I am not registered with Service Tax but have been investigated by service tax authorities for work contract services provided by me during FY 2009-10. While investigation, my statement was recorded by authorities on 20th November 2012 but no amount of Service tax demanded from me.

On 7th April 2015, I have been served Show Cause Notice regarding Service tax demand for the work contract I executed during FY 2009-10.

Kindly suggest and advice me on timing of SCN in the matter.

Thanks and regards.

Vijesh Jaiswal

Posts / Replies

[PAWAN KUMAR]

Dear Sir,

As per my view, The investigation is related to FY 2009-10 which was conducted during Year 2012. According to general provisions as per section 11A(1)  of Central Excise Act, 1944, the period of issuance of SCN is one year, however if the department has proved that the assessee has suppressed the facts, or by collusion or by fraud, or any willful mis-statement, or contravention of any of the provisions of this act or rules made thereunder with intent to evade payment of duty invoking extending period of limitation, the subject period of issuance would be considered as five years in place of one year from the relevant date. Thus, you check with your SCN, it would issued during March'2015 and served you during April'2015.

Another instance is the service tax return due date was 25.04.2010 for the period from October 2009 to March 2010, the subject due date of 25.04.2010 can be considered as relevant date and the five years as per my view. therefore the department served the notice on 07.04.2015, i.e. prior to 25.04.2015.

[Rajagopalan Ranganathan]

Sir,

According to Section 73 (1) of Finance Act, 1994, if any service tax is not levied or not paid or short levied or short paid or erroneously refunded Central Excise Officers shall issue show cause notice demanding the amount of tax not levied or not paid or short levied or short paid or erroneously refunded within eighteen months from the relevant date.

According to Section 73 (6) of the Finance Act, 1994 the relevant date means-

(i) in the case of taxable service in respect of which service tax has not been levied or paid or has been short-levied or short-paid-

(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;

(b) where no periodical return as aforesaid is filed, the last date on which such return is to be filed under the said rules;

(c) in any other case, the date on which the service tax is to be paid under this Chapter or the rules made thereunder;

(ii) in a case where the service tax is provisionally assessed under this Chapter or the rules made thereunder, the date of adjustment of the service tax after the final assessment thereof;

(iii) in a case where any sum, relating to service tax, has erroneously been refunded, the date of such refund.

Once the show cause notice is issued the Department cannot invoke five year period subsequently, that is, if Department had issued showcause notice for the year 2009-10 in 2012 the period 18 months or five years is to calculated backwards from the date on which the investigation was concluded. Actually there is no time limit prescribed for issuing show cause notice. However High courts have found inordinate delay in issuing show cause notice as erroneous and not sustainable..

[Vijesh Jaiswal]

Dear SirIn my case, no SCN was iasued prior to 7 April 2015. Only investigation was gping on before 7 April 2015and I always supplied all the documents whenever asked by authorities.The work contract of FY 2009-10 for which SCN issued was discussed during my statement in 2012. But no tax was calculated or asked from me. After that, they asked me to provide documents of FY 2012-14 in year 2013and documents of 2013-14 in year 2014.