Assesee claiming bogus cenvat credit

[HARSHIT BAJAJ]

One assesse is claming bogus credit without paying any service tax , what are chances for asessment from Income tax or Service Tax dept

[KASTURI SETHI]

Sir,

In Service Tax sector, if amount of fraudulently availed Cenvat Credit is more than ₹ 2 crores, prosecution can be launched against the offender under Section 91 of the Finance Act, 1994.

2. Penalty equal to the amount of credit availed fraudulently, is imposable under Section 78 read with Rule 15 (3) of Cenvat Credit Rules, 2004.

3. Recovery of the amount of credit involved and interest @ 24% under Rule 14 of Cenvat Credit Rules, 2004 read with Section 73 and 75 of the Finance Act respectively.

Income Tax is not my field.

[Ganeshan Kalyani]

Sir i agree with Sri Kasturi Sir's view. Further in income there is no provision for availment of credit etc. Income tax is on income as apparent from the term. Hence no assessment in income tax. However in couple of years income tax department has brought so many changes in the income tax forms. For e.g. in Tax Audit form the List of All registrations number under various Act is required to be furnished. Also I have read that there will be information shared across the department like MIS of such in such other format. Hence I mean to say that though there is no provison of cenvat credit availment in Income Tax the information shared may trigger the Excise department. This is my views. Thanks.

[KASTURI SETHI]

If any case is booked by Central Excise, Customs & Service Tax Department against any defaulter involving a huge Govt. revenue, the information is passed on to the Income Tax Department and Similarly, Income Tax department passes information of defaulter/offenders/accused to Central Excise department.This is coordination between the departments. Both the departments are under the Ministry of Finance.

[DR.MARIAPPAN GOVINDARAJAN]

In respect of service tax, as told by my learned friends he is liable to penalty as well as prosecution if the amount reaches the threshold limit. In respect of income tax the said will be disallowed.

AI Summary

Fraudulent Cenvat Credit Over 2 Crores Triggers Penalties and Prosecution Under Finance Act and Cenvat Credit Rules. An individual raised a query about an assessee claiming bogus Cenvat credit without paying service tax, questioning the likelihood of assessment by the Income Tax or Service Tax departments. Respondents explained that if the fraudulently availed Cenvat credit exceeds 2 crores, prosecution and penalties can be imposed under the Finance Act and Cenvat Credit Rules. Coordination between the Service Tax and Income Tax departments facilitates information sharing about defaulters. While income tax does not involve Cenvat credit, shared information may alert excise authorities. Penalties and prosecution apply if the threshold is met, and income tax disallows such credits.