TMI BlogProsecution provision in Finance Act, 1994 – regarding.X X X X Extracts X X X X X X X X Extracts X X X X ..... Subject: Prosecution provision in Finance Act, 1994 regarding . With the enactment of Finance Act, 2011 (No.8 of 2011), Section 89 which provides for prosecution of specified offences involving service tax, becomes a part of Chapter V of Finance Act, 1994 . 2. Prosecution provision was introduced this year, in Chapter V of Finance Act, 1994 , as part of a compliance philosophy involving rationalization of penal provisions. Encouraging voluntary compliance and introduction of penalties based on the gravity of offences are some important principles which guide the changes made this year, in the penal provisions governing service tax. While minor technical omissions or commissions have been made punishable with simple pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice shall be determined in terms of Point of Taxation Rules, 2011 . In the case of persons liable to pay tax on reverse charge basis, the date of provision of service shall be the date of payment except in the case of associated enterprises receiving services from abroad where the date shall be earlier of the date of credit in the books of accounts or the date of payment. It is at this stage that the transaction must be accounted for. Thus the service receiver, liable to pay tax on reverse charge basis is required to ensure that the invoice is available at the time the payment is made or at least received within 14 days thereafter and in the case of associated enterprises, invoice should be available with the service receiver at the time o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in excess of the amount originally stated in the invoice. 8. Clause (c) of section 89(1) of Finance Act, 1994 , is based on similar provision in the central excise law. It should be noted that the offence in relation to maintenance of false books of accounts or failure to supply the required information or supplying of false information, should be in material particulars have a bearing on the tax liability. Mere expression of opinions shall not be covered by the said clause. Supplying false information, in response to summons, will also be covered under this provision. 9. Clause (d) of section 89(1) of Finance Act, 1994 , will apply only when the amount has been collected as service tax. It is not meant to apply to mere non-pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax itself establishes his guilt . If the accused claims that he did not have guilty mind, it is for him to prove the same beyond reasonable doubt. Thus burden of proof regarding non existence of mens rea is on the accused . 12. It may be noted that in terms of section 89(3) of Finance Act, 1994 , the following grounds are not considered special and adequate reasons for awarding reduced imprisonment: (i) the fact that the accused has been convicted for the first time for an offence under Finance Act, 1994; (ii) the fact that in any proceeding under the said Act, other than prosecution, the accused has been ordered to pay a penalty or any other action has been taken against him for the same act which constitutes the offenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord detailed reasons for its decision to sanction or not to sanction prosecution, on file. 16. Prosecution proceedings in a court of law are to be generally initiated after departmental adjudication of an offence has been completed, although there is no legal bar against launch of prosecution before adjudication. Generally, the adjudicator should indicate whether a case is fit for prosecution, though this is not a necessary pre-condition. To launch prosecution against top management of the company, sufficient and clear evidence to show their direct involvement in the offence is required. Once prosecution is sanctioned, complaint should be filed in the appropriate court immediately. If the complaint could not be filed for any reason, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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