SCN time barred

[Babulal Luhar]

Dear Sir,

I received and completed a work order in FY 2012-13 for a Pvt company. That work order cost reached by 12 lakh and payment received in my bank account by part but pvt compny filed my TDS consolidated in end of March 2013. Since I felt that I m losing my money and getting loss in the business then stopped to worked and flew to abroad for a new job. In 2017 I had been surrendered my TIN to closing completely my firm. 5th May 2018 Suddenly my family received a SCN dated 20th April 2018 from service tax department with a due payment of ₹ 149000 + and now send me letter for personal hearing and ask to appear in that hearing before one day of hearing date. I m still out of India. Please guide me what should I do in this case.

thanks

regards

[KASTURI SETHI]

Temporary solution is here. You are entitled to three adjournments. The demand is not time barred. Demand can be raised for the last five years from due date of filing ST-3 or from the date of receipt of payment for providing taxable service.

[Babulal Luhar]

Dear Sethi Sir,

Thank you for your reply, I was not aware about service tax liabilities because that firm was my start up and ran only for 2.5 years. There is any chance to escape from this kind of issue, SCN dispatched on 3rd May 2018 and received at my home on 5th May 2018. Can department ask me any interest on same amount.

Regards

[KASTURI SETHI]

As per Section 73 (6)(i)(b) of the Finance Act, 1994, 5 year period is to be calculated from due date of filing ST-3 return. Due date of ST-3 return was 25.4.2013. It appears that SCN was required to be served on or before 25.4.18. There are so many factors to be considered in this case. Whether the demand is time barred or not ? Whether the whole demand is time barred or part demand is time barred ; That can be ascertained only after going through the facts detailed in the SCN.. Sometimes the querists are not able to convey correct and true facts and circumstances detailed in the SCN.

[DR.MARIAPPAN GOVINDARAJAN]

What is the period for demanding service tax? If notice is sent after 5 years it would be time barred.

You may go through the show cause notice and the allegations made therein. Give suitable reply and appear before the Authority.

If required you may take the assistance of professionals.

[Babulal Luhar]

Dear Dr. Govindarajan Sir,

Thanks for your reply. The issue is flow chart is like below:-

1. Work Order executed during:- FY 2012-13
2. Payment Received from Party:- Sept 2012
3. TDS Booking date :- 23 Oct 2012
4. My Firm stopped working after FY 2012-13. (it was my last work order)
5. Firm TIN applied for surrender June 2017
6. SCN dated 20 April 2017 dispatched on 3 May 2018 and received 5 May 2018
7. Facts : amount received during FY 2012-13 and TDS deducted therein under section 194C/194H/194I/194J of the income tax act 1961
8. Amount demanding ₹ 149866/- (including Cess charges)
9. Notice issued for personal hearing (at Assistant Commissioner) dated 15 March 2019
10. Date fixed by dept. for hearing 22/25/26 March 2019 and information received on 23rd March 2019

Already lost more than 5 lac and 2.5 Years in the same business, now doing job abroad.

Thanks

Regards

[KASTURI SETHI]

What was the gross amount received during the year 12-13 ? In other words, that amount (taxable value) on which ST (including cesses ) has been calculated. It appears to be time barred. What about threshold exemption ?

[KASTURI SETHI]

Do not be panicky.

[KASTURI SETHI]

Three dates of personal hearing cannot be given in one letter. You are entitled to three separate dates of personal hearing in three separate letters.

[Babulal Luhar]

Dear Sethi Sir,

The gross amount received during 2012-13 as per ITR filing are like below

Gross Turnover or Gross Receipts 3015109

Out of gross income amount 1200505 (which ST taxable) received Under section 194C and remaining amount 1814604 from trading

Total Presumptive income under 44AD (>= 8% of E1) 244384

About three dates, they give option to choose as per my convenient any date to appear for personal hearing.

Thanks

Regards

[KASTURI SETHI]

Extract of Board's Circular No.1053/2/2017-CX dated 10.3.17

14.3 Personal hearing : After having given a fair opportunity to the noticee for replying to the show cause notice, the adjudicating authority may proceed to fix a date and time for personal hearing in the case and request the assessee to appear before him for a personal hearing by himself or through an authorised representative. At least three opportunities of personal hearing should be given with sufficient interval of time so that the noticee may avail opportunity of being heard. Separate communications should be made to the noticee for each opportunity of personal hearing. In fact separate letter for each hearing/extension should be issued at sufficient interval. The Adjudicating authority may, if sufficient cause is shown, at any stage of proceeding adjourn the hearing for reasons to be recorded in writing. However, no such adjournment shall be granted more than three times to a noticee.

In pursuance of above circular, the department will accord you two more opportunities for personal hearing in a separate letter for each hearing.

[KASTURI SETHI]

Rightly advised by Dr.Govindarajan Sir. The case is tilting in your favour. You should hire an advocate or C.A. or Consultant who is expert in Service Tax law. It is my experience and observation that assessees spoil their case in order to save the consultation fee of the professional. It is based on facts. When any case is spoiled, there is no use of crying over spilt milk.Situation becomes beyond repair. It is my duty to give your sincere advice. Decision is yours.

[Babulal Luhar]

Dear Sethi Sir & Dr. Govindarajan Sir,

Thank you very much both of you, Yes, I will sure consult with professional and will take service from them.

Regards

AI Summary

Limitation period defence may render a service tax show-cause notice time-barred; separate personal hearing opportunities must be afforded. A show-cause notice for service tax can be contested on limitation grounds because the limitation period is computed from the due date for filing the ST-3 return. Determining whether the demand is wholly or partly time-barred requires close comparison of the SCN facts with return dates, taxable value, and exemptions. Procedurally, the noticee is entitled to at least three separate personal hearing opportunities and may seek adjournments for sufficient cause; professional advice is recommended to address limitation, interest exposure, and representation.