service tax arrears

[Arvind Pangaonkar]

Sir

I had not registered for service tax payment, but was paid remuneration under 194J .

I have received notice to pay arrears. Is there any limit for the arrears as to for how many past years the tax authorities can ask me to pay.

It was just that I was completely nanaware of service tax hence this query.

Regards

Arvind Pangaonkar

[Ramaswamy S]

5+1 year (total six years).

Regards

S.Ramaswamy

[KASTURI SETHI]

Dear Querist,

What service was provided by you ? Sometimes letters are issued in routine i.e. on the basis of Income Tax return filed by you. Pl. elaborate your query so as to enable the experts to examine the applicability of ST. Receiving the letter from the department does not mean S.T. is payable by you. You cannot jump at conclusion.

[Arvind Pangaonkar]

Dear Sri Kasturi Sethi,.Many thanks for looking at my question, regarding my profession, I was in R&D as General manager. Since 2010(I was 65 years old), I was hired as a consultant till Feb 2017. Now at home.

In form 26AS, the remuneration is under 194J.

The notice and further correspondence started with my earnings as consultant (fy 2014-15) which has been more than 20 lakh per year.

Kindly offer comments

Regards

[Ganeshan Kalyani]

Sir, you were appointed as a consultant which means you were a provider of service. You were supposed to take registration collect Service tax from you client (in this case your company) and pay it to the Govt. Also there was a compliance of filing of service tax return every half yearly.

Since you haven't complied the provision the notice received is correct. In my view the department can enquire or audit of the records of five years.

[KASTURI SETHI]

Sir, I agree with Sh.Ganeshan Kalyani, an expert. His reply is 100% correct. Further, had you been employee of the company, situation would have been different. I think you worked under contract.You were not employee after 2010. TDS is also part of taxable value for the purpose of payment of ST. Supposing that you were not employee and remained under contract for Taxable Service, you are required to deposit ST with interest and minimum applicable penalty and get the file closed. The department can back for last 5 years. If any person collects ST but does not deposit then no time limit. Threshold exemption if ₹ 10 lakhs for one year is available to you.

[Ganeshan Kalyani]

Thanks Sri Kasturi Sir for your appreciation. Sir, the querist can request the company to pay the service tax component to him which he can deposit to the exchequer. However, the agreement between the querist and the company also is important to find a way out.

[Arvind Pangaonkar]

Dear Sri Kasturi Sethi and Sri Ganesan Kalyani

Wish to profusely thank you both for fully clarifying my situation.

Best regards and have a good day.

Regards

Arvind Pangaonkar 9894401025

[KASTURI SETHI]

Dear Sh.Kalyani Ji,

As per Section 68(1) of the Finance Act, 1994, the service receiver is legally bound to pay ST to the Service Provider and Service Provider is required to collect from him and deposit into Central Govt. Account, whatever may be terms and conditions of the agreement. Agreement/contract cannot be executed in violation of letter and spirit of Service Tax law. However, in case of any eventuality, consideration received by the Service Provider has to be treated cum-tax price under Section 67(3) of the Finance Act.

[Ganeshan Kalyani]

Sri Kasturi Sir, i fully agree with you. Had the service provider was registered and charged tax on invoice the recipient had to pay the sum to the provider of service. Subject to threshold limit, obviously. Here, Sri Arvind Sir should request the company to disburse him the service tax amount. So that he can do the compliance. However, in practice before considering the request of service provider company generally demands a proof that the service provider is registered under service tax. A copy of certificate also is asked by the finance department of the company before releasing the tax payment.

[Ganeshan Kalyani]

Sri Arvind Sir, thanks for your pats and appreciation. It boost me.

[Arvind Pangaonkar]

Sri Ganesan Kalyani and Sri Kasturi Sethi

Frankly speaking, I did not know anything about Service tax. Being a mechanical engineer, 37 years have gone in enjoyable service, which included design development and also solving critical problems. Great learning.

The tax side in mind was absolutely weak.

Reading expert comments from learned authorities like you has been fortunate for me.

I was browsing and came across this wonderful forum just few days ago. Mr Sethi has been quick and helpful in offering advice, Mr Kalyani too has added knowledge to a novice like me.

Once again many thanks, sirs

Best regards

Arvind Pangaonkar

9894401025, Bangalore