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MISTAKE IN DECLARING LIABILITY WILL LEAD TO RECOVERY WITHOUT SCN

Central Excise - By: - Pradeep Jain - Dated:- 12-3-2015 - Introduction:- This article is an attempt to analyse the impact of amendment made in section 11A of the Central Excise Act, 1944 and section 73 of the Finance Act wherein no show cause notice will be issued if the assessee has self-assessed and declared the duty payable by them in the periodic returns filed by them and recovery proceedings will be initiated without even providing the assessee with the opportunity of being heard. This is a .....

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y of duty not paid or short paid is self-assessed and declared as duty payable by the assessee in the periodic returns filed by him, and in such case, the recovery of non-payment or short-payment of duty shall be made in such manner as may be prescribed. On similar lines, a new sub-section (1B) has been inserted in section 73 of the Finance Act which reads as follows:- Notwithstanding anything contained in sub-section (1), in a case where the amount of service tax payable has been self-assessed .....

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st adjudicator of his tax liabilities and there is no need to provide him the opportunity to defend his case when the tax liability already declared by him in the returns is not paid/short paid. But, is this amendment, practically justifiable? The answer is NO because at times, the mistake in declaring tax liabilities occurs for no fault of the assessee. In such a case, initiating recovery proceedings without even following the principles of natural justice by issuing show cause notice to the as .....

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as no fault on the part of the assessee. It is pertinent to note here that prior to 1.4.2011, the service provider of money changing services had an option to pay service tax at the rate of 0.25% of the gross amount of currency exchanged. However, w.e.f., 1.4.2011, Rule 6(7B) of the Service Tax Rules, was amended to provide special facility for payment of service tax on purchase and sale of foreign exchange. A system of slab rates was devised wherein service tax was to be calculated as follows:- .....

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m in the ST-3 return utility, the service tax payable under the banking and financial services was being automatically calculated by the software according to the old provisions at the rate of 0.25% of the gross amount of currency exchanged. However, if the assessee calculated the amount of service tax payable by them under the amended provisions, the same was lower than the amount as per the old provisions. Consequently, in view of the practical difficulty in reflecting the correct amount of se .....

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hor submits that as the case pertains to before amendment in section 73, the assessee has the appellate remedy against the service tax demand confirmed. However, in view of the amended provisions, such cases would face the harassment of the revenue authorities and even the constitutional right of defending themselves where infact there has been no short payment of taxes. It is also worth noting that this amendment also overrides the judicial pronouncements that have concluded that order confirmi .....

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the error in correctly reflecting the taxes payable in the return filed by the assessees may creep in for a number of reasons. The mistakes may be due to technical problems in the return utilities, wrong interpretation of the value of taxable service, particularly in service tax, where there is so much ambiguity. There are several valuation issues in service tax like inclusion of reimbursable expenditure, valuation of works contract under correct category etc. When the valuation aspects are so .....

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