Rights available to Defaulter of service tax

[Guest]

Respected sir/madam

I work in an small company whose director had another proprietor company ,He didn't paid any service tax to one of his project which was about 10 lakhs. Now the service tax people are asking him to pay 3 times of it ,so i wanted to know what are the rights available to him and can he ask the tax authorities to give him details of his default case before giving any sorts of statement to tax authority for which they are pressurising him very much. From where can we get the details of all his default cases so that we can make payment and close the case as early as possible. it will be very helpful for my company and it's employee future if you can advice us what to do and not to do and option available to my boss as we lack in finance knowledge.

Regards

SUNIL

[KASTURI SETHI]

Dear Sh.Sunil Kumar Yadav Ji,

What is constitution of 'small company’? Whether this co. is engaged in manufacturing activity or providing any service or both? What is the service of Prop. Co.? There is no such provision in Service Tax law to demand three times of Service Tax not paid. If it is proved that there was no mala fide intention on the part of assessee and it was a bona fide mistake and if Service Tax is paid along with interest within 30 days of the service of the show cause notice, no penalty is payable under Section 76 of the Finance Act. If mala fide intention is proved and service tax along with interest is paid within 30 days of the service of the SCN, penalty will be 15% of the ST evaded under Section 78 .And if ST along with interest is paid within thirty days after the service of adjudication order, 25% penalty of ST evaded will be payable and case will stand concluded. The benefit of reduced penalty will be available if 25% penalty is paid within 30 days of the receipt of Order.

You can ask for the details Service Tax not paid from the department. The department officer can record your statement under Section 14 of the Central Excise Act as made applicable to Service Tax .They can ask any information.

From your query it appears the the Officers want to club the value of services for both firms but it is not possible as both have separate legal entity. Nothing to panic. Deposit your dues along with interest and penalty of 25% if applicable, the case will be closed without issuance of SCN.This is the maximum.If you want to fight the case, then demand SCN. It is your option.

 

[Ganeshan Kalyani]

The reply submitted by Sri Kasturi Sir is in detail catering to your query in all sense. I too would like to opine to pay service tax if you have not paid the tax along with interest and applicable penalty. This would certainly close the proceedings. Thanks.

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,

Though you always support my views on merits, yet it matters a lot for me. Really you never miss the moment. I am obliged to you

AI Summary

Penalty relief for bona fide service tax defaults: payment with interest within prescribed period avoids penalty. Defaulters can obtain details of alleged service tax defaults and must be aware that departmental officers may record statements under the Central Excise Act as applied to service tax. Penalties vary by intent and timing: bona fide mistakes paid with interest within thirty days of a show cause notice attract no penalty; mala fide evasion paid with interest within thirty days of the show cause notice incurs a reduced penalty; payment within thirty days after an adjudication order incurs a specified reduced penalty that, if paid within thirty days of the order, closes the case. Depositing dues with interest and the applicable reduced penalty can conclude proceedings, or the taxpayer may demand a show cause notice and contest the case. Separate legal entities should be treated independently for valuation.