TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Taxability of work-contract service receipts found taxable u/s 65B; one Form 26AS payment excluded from extended limitation</h1> Whether services were taxable: The tribunal found that, absent mandatory documentary proof (agreements, payment receipts, bank statements), the ... Demand of service tax - invoking the extended period of limitation as per proviso to Section 73 (1) of the Finance Act, 1994 - work contract to services to various contractors who were providing services to various government authorities - payment received in connection of repair, alteration of Road, bridge etc. for use by general public - Whether the service income earned by them for the corresponding period is attributable to any negative list services contained in Section 66D of the erstwhile Finance Act, 1994 or is, - HELD THAT:- As the appellant did not provide the mandatory documents like copies of Agreements with various contractors Government department, details of receipt of payments, copy of bank statements etc., the services provided by the appellant were taxable under Section 65(B) of the Act and the appellant was liable to pay service tax. It is quite evident that appellant was engaged in providing taxable services under the category of work contract to services to various contractors who were providing services to various government authorities, which have been held to be exempt from payment of service tax by the adjudicating authority. During financial year 2016-17, it is observed that appellant had provided services to one such contractor namely M/s Iqbal Construction Company. Appellant has claimed that the excess receipt shown in 26AS towards provision of services was not in respect of any services provided by the appellant but was towards the supply of material. They have also produced certificates from M/s Iqbal Construction Company, invoices etc., to support their claim. In the certificate M/s Iqbal Construction Company has specifically stated that these payments were towards the supply of material, and on account of clerical mistake, TDS was deducted on these payments treating them to be towards services. The error committed was subsequently rectified and impugned order records about a negative entry of the same amount in the 26AS return of the appellant. Appellant had reasonable and bonafide belief that even if this amount was towards any service provided by them to M/s Iqbal Construction Company then the same was exempt from payment of service tax, as order in original itself holds that the services provided by the appellant in terms of the two contracts is exempt from payment of service tax. As appellant entertained a bonafide belief that they were not required to pay any service tax in respect of the services provided by them to M/s Iqbal Construction Company, No merits in confirmation of this demand by invoking the extended period of limitation as per proviso to Section 73 (1) of the Finance Act, 1994. Issues: Whether the demand and recovery of service tax of Rs. 3,72,168/- on excess receipts, together with interest under Section 75 and penalties under Sections 78, 77(1)(a), 77(1)(c) and 77(2) (Finance Act, 1994) invoked by applying the proviso to Section 73(1) (Finance Act, 1994) is legally sustainable, having regard to limitation and the evidence regarding exemption or supply characterization.Analysis: The question centrally concerns invocation of the extended five-year limitation under the proviso to Section 73(1) which requires specific and serious allegations such as fraud, collusion, willful misstatement or suppression of facts with intent to evade tax and places the burden of proving mala fide on the revenue. The impugned appellate order failed to record any finding on limitation despite the appellant raising it. Documentary materials produced did not conclusively disprove the appellant's contention that the excess receipts related to supplies on which VAT was paid and that there was a bona fide belief that the receipts were not taxable services; lower authorities likewise did not identify the particular taxable service corresponding to the excess receipts. The show-cause notice and subsequent findings did not meet the requirement of specific averments necessary to invoke the proviso, and the record did not establish suppression or mala fide to the high standard required for extending the limitation period.Conclusion: The demand, interest and penalties confirmed by the lower authorities by invoking the proviso to Section 73(1) are not maintainable; the appeal is allowed in favour of the appellant.
TaxTMI 
TaxTMI 
