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Tax paid for period beyond 5 years SCN not issued is interest payable, Service Tax

Issue Id: - 117456
Dated: 28-8-2021
By:- Parimal Kulkarni
Tax paid for period beyond 5 years SCN not issued is interest payable

  • Contents

Dear Members,

An Individual was required to be registered for service tax but he was not aware of the same. Inquiry was initiated for FY 15-16 and tax was paid but no SCN was issued before 29.04.2021 (so time barred). Now the department officer is seeking interest to be paid and 15% penalty. Is interest/penalty payable in such a case? Section 73(6) (c) states "in any other case, the date on which the service tax is to be paid under this Chapter or the rules made thereunder."

In our view, Relevant date speaks of 5 years but that cannot be counted from the date of payment and hence SCN cannot be issued. Please do share your views

PS: For FY 16-17 onwards the individual has nil turnover and joined employment.

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Posts / Replies

Showing Replies 1 to 11 of 11 Records

1 Dated: 29-8-2021
By:- KASTURI SETHI

Sh.Parimal Kulkarni Ji,

Why have you not sought advice before deposit of Service Tax which you think is time barred ?

Pl. reply and after your receipt of reply I shall post comprehensive reply here.


2 Dated: 29-8-2021
By:- KASTURI SETHI

Has the department issued any letter to you or instructing verbally to deposit interest and penalty ?


3 Dated: 30-8-2021
By:- KASTURI SETHI

Tax, interest & penalty cannot be demanded before adjudication.---Telangana High Court in the case of Deem Distributors (P) Ltd. Vs. UOI 2021 (8) TMI 405 - TELANGANA HIGH COURT decided on 13.8.21.


4 Dated: 30-8-2021
By:- Parimal Kulkarni

These are classic situations where assessee directly undertakes certain positions with the department and consultants get involved later. There is no letter issued seeking interest and penalty - all oral.


5 Dated: 31-8-2021
By:- KASTURI SETHI

"These are classic situations where assessee directly undertakes certain positions with the department".

It appears to me that the above words show you have been 'wooed'


6 Dated: 31-8-2021
By:- Parimal Kulkarni

While reviewing the matter in TMI We found the case of

2020 (2) TMI 226 - CESTAT BANGALORE, AARMS VALUE CHAIN PVT. LTD. VERSUS COMMISSIONER OF CENTRAL TAX, BANGALORE WEST, Service Tax Appeal No. 21000 of 2018, Order No. - Final Order No. 20072/2020, Dated: - 28 January 2020

May be of help to those having similar issues


7 Dated: 1-9-2021
By:- KASTURI SETHI

Sh.Parimal Kulkarni Ji,

The case law posted by you is very very useful in this scenario. I could not trace out the status of this case law on EXCUS regarding whether this judgement has been accepted by the department. If the department has accepted it, your case will be very strong on time limitation.


8 Dated: 1-9-2021
By:- Parimal Kulkarni

Thank you sir


9 Dated: 6-9-2021
By:- Amit Agrawal

Adding two cents to views of fellow professionals:

In given case, relevant date u/s 73 needs to be computed from due date of filing service tax return/s for the material period and date of actual payment of taxes is irrelevant.

Your attention is invited to Apex Court Ruling in case of Commissioner v. T.V.S. Whirpool Ltd. - 1999 (10) TMI 701 - SC ORDER (S.C), wherein while dismissing the Department's appeal, the Supreme Court passed the following order :-

It is only reasonable that the period of limitation that applies to a claim for the principal amount should also apply to the claim for interest thereon. We find no merit in the appeals and they are dismissed with costs.”

One can also look into possibilities of getting refund of taxes already paid, though it can be long drawn battle for sure and one needs to check many facets before pursuing such action. But, if quantum of potential refund is not significant, it would be better to treat the refund-option closed considering costs and time required therefor.

These should be treated strictly as my personal views and not as professional advice/s.


10 Dated: 6-9-2021
By:- Vikram Bansal

Even though no one likes to pay taxes, it is important to give an adequate charge to the collection body. The money collected from taxes is used to support the development and provide resources to the people in the country. However, to reduce the burden of taxes on people, particularly income tax, the government provides specific standard deductions, tax exemptions, as well as tax deductions for the tax-saving investments made under the purview of the Income Tax law.


11 Dated: 13-9-2021
By:- KASTURI SETHI

Sh.Parimal Kulkarni Ji,

Interest voluntary paid on time barred is not refundable----CESTAT MUMBAI in the case Lumax Auto Technologies Ltd.Vs.CE, Pune-1 reported as 2018 (2) TMI 1550 - CESTAT MUMBAI. Service Tax case.


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