Service Tax collected but not deposited-SCN issued but wrong classification

[Sumeet Tholle]

Dear Sir,

My client registered with Service Tax department under Erection, Installation Service and collected Service Tax.

But since last 7 years he has not deposited Service Tax and not filed returns also.

Now, department issued SCN for recovery of Tax for 7 years and imposed penalties also. But department issued SCN under ' Manpower Supply Service'.

Our activity no where related with manpower.

Now my question is

1. Can department issue SCN for 7 years ?

2. Is SCN valid as classification is not correct ?

Again Pl. note, My client collected Service Tax but not paid.

Pl. reply.

Pl. quote case laws also.

Thanks.

Sumeet C. Tholle,

CA,

Aurangabad.

AI Summary

Debate Over Validity of Show Cause Notice for Wrong Service Tax Classification and Seven-Year Demand Limit A client registered under Erection, Installation Service collected service tax but failed to deposit it or file returns for seven years. The tax department issued a show cause notice (SCN) under the incorrect classification of 'Manpower Supply Service.' Legal experts debated whether the SCN is valid given the wrong classification and whether the department can demand tax for seven years, as typically, demands are limited to five years. Some argue that classification errors invalidate the SCN, while others stress the seriousness of non-payment and suggest settlement to minimize penalties. The discussion highlights the legal complexities and potential consequences of tax evasion.