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Mismatch between Income tax return and Service tax, Service Tax

Issue Id: - 117014
Dated: 16-2-2021
By:- AVNISH KHAN
Mismatch between Income tax return and Service tax

  • Contents

A notice has been issued by the CGST department for FY 2015-16 stating there is a mismatch between the income tax return and service tax.

In our case we aren't registered with service tax department .

Can the notice is being challenged stating the notice has been issued beyond the limitation period of 18 months.

Since it is not a case of fraud or suppression may be a case of ignorance of the law.

Your response is highly appreciated.

Thanks Avnish Khan

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Posts / Replies

Showing Replies 1 to 14 of 14 Records

1 Dated: 17-2-2021
By:- KASTURI SETHI

Yes. It must be challenged. Suppression of facts with an intent to evade payment of tax cannot be established by the department. Burden of proof is on the department and not on you.There are so many case laws in your favour.


2 Dated: 19-2-2021
By:- Bayyareddy DK

One person approached me who is has done daily labour work for building and in his name TDS deducted and to get refund he has filed Income return. Now CGST issued a showcause notice to pay Service tax.

01. This client not received any service tax from the Mr. A builder.

02 During the same year another builder Mr. B daily labour work, he has paid service tax to the client and client discharged service and filed returns.

What to do now as he is not able to collect from Mr A builder and not have ability to discharge the liability.


3 Dated: 19-2-2021
By:- KASTURI SETHI

Pl.post important contents of show cause notice. Without going through SCN, correct reply is not possible. So post important contents of SCN


4 Dated: 19-2-2021
By:- Bayyareddy DK

Contents of the SCN are

01. On verification of the TDS deductions from Income Tax Department, it appears that assessee has received taxable amount from the receipient of services and tax payer appears to have not discharged the Service tax liability.

02. Quantification of Service tax - FY 2014-2015 - to be quantified, FY 2015-2016 - As per 26AS and Income tax return 4 - Gross Amount ₹ 1,13,28,837 & Tax is ₹ 16,42,681/-, FY 2016-2017 - to be quantified

03. From the available records it is demanded and recovered from the taxpayaer of ₹ 16,42,681,under the provisions of the Section 73(1) of the Finance Act.

03. Also Interest and penalty has to demanded U/s. 75, 76 and 77(2) for non filing of returns.


5 Dated: 19-2-2021
By:- KASTURI SETHI

(i) What is the name/nature of service mentioned in the SCN ? What Accounting Code no. has been mentioned in the SCN ?

(ii) It appears that manpower supply service was provided. If it is so, what is the constitutional status of the builder (whether Ltd. Co., Pvt. Ltd or Proprietorship etc.) ?

Pl. clarify.


6 Dated: 19-2-2021
By:- KASTURI SETHI

It is obvious that SCN has been issued by invoking extended period and the extended period can be invoked only if mala fide intention with an intent to evade payment of tax is involved The burden of proof is cast upon the department and not on you. There are case laws to this effect.


7 Dated: 19-2-2021
By:- AVNISH KHAN

Can you please share the case laws


8 Dated: 19-2-2021
By:- Bayyareddy DK

Sir,

01. In the SCN, No code is mentioned as it only mentioned that assessee not appeared/replied any notices, in the absence of nature of service, amount could not be ascertained, so amount not quantified and cited Board circular 1053/02/2017 dated 10/3/2017 and case Gwalior Rayon Mfg.v/s UOI = 1982 (4) TMI 68 - MADHYA PRADESH HIGH COURT.

02. It is Manpower/labour supply to Pvt ltd company by an Individual.


9 Dated: 19-2-2021
By:- KASTURI SETHI

Dear Bayya reddy DK,

W.e.f. 1.4.15, 100% ST is to be paid by the service receiver under RCM. See Notification No.7/15-ST dated dated 1.3.15 effective from 1.4.15. This notification amends Notification no.30/12-ST dated 1.6.12. Prior to 1.4.15, 25% of ST was required to be paid by the Service Provider and 75% by Service Receiver.under RCM.

The period prior to October, 14 has become time barred.


10 Dated: 19-2-2021
By:- KASTURI SETHI

Dear Avnish Khan,

Case laws regarding burden of proof are as follows:-

(i) 2009 (13) S.T.R. 655 (Tri. - Bang.) in the case of Chandra Shipping and Trading Services Vs. C.C.E. & C., VISAKHAPATNAM-II = 2008 (8) TMI 168 - CESTAT, BANGALORE.

(ii) Reported as 2008 (12) S.T.R. 730 (Tri. - Del.) = 2008 (8) TMI 50 - CESTAT NEW DELHI in the case of DEWSOFT OVERSEAS PVT. LTD. Vs. COMMR. OF SERVICE TAX, NEW DELHI.


11 Dated: 20-2-2021
By:- KASTURI SETHI

Another case law on the issue of burden of proof :

2008 (9) S.T.R. 155 (Tri. - Bang.) = 2007 (8) TMI 754 - CESTAT BANGALORE in the case of UNITED TELECOM LTD.Vs.COMMISSIONER OF SERVICE TAX,BANGALORE.


12 Dated: 20-2-2021
By:- KASTURI SETHI

Board's circular No.1053/2/17-CX dated 10.3.2017

3.2  Ingredients for extended period: Extended period can be invoked only when there are  ingredients necessary to justify the demand for the extended period in a case leading to short payment or non-payment of tax. The onus of establishing that these ingredients are present in a given case is on revenue and these ingredients need to be clearly brought out in the Show Cause Notice alongwith evidence thereof. The active element of intent to evade duty by action or inaction needs to be present for invoking extended period. 

3.3 The Apex Court‟s in the case of M/s Cosmic Dye chemical Vs Collector of Cen. Excise, Bombay [1995 (75) E.L.T. 721 (S.C.) = 1994 (9) TMI 86 - SUPREME COURT, has laid the law on the subject very clearly. The same is reproduced below for ease of reference. 

Now so far as fraud and collusion are concerned, it is evident that the requisite intent, i.e., intent to evade duty is built into these very words. So far as mis-statement or suppression of facts are concerned, they are clearly qualified by the word “wilful” preceding the words “mis-statement or suppression of facts” which means with intent to evade duty. The next set of words “contravention of any of the provisions of this Act or Rules” are again qualified by the immediately following words “with intent to evade payment of duty”. It is, therefore, not correct to say that there can be a suppression or mis-statement of fact, which is not wilful and yet constitutes a permissible ground for the purpose of the proviso to Section 11A. Misstatement or suppression of fact must be wilful.


13 Dated: 20-2-2021
By:- KASTURI SETHI

And Board's circulars are binding on the department----held by Hon'ble Supreme Court.


14 Dated: 23-2-2021
By:- Ganeshan Kalyani

The efforts of Sri Kasturi Sir to resolve the query till the querist is satisfied is appreciable. Sir, you are an inspiration for us.


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