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Tax demand for wrong mention of Notification No. in ST3 RETURN

MAHESH M

A Service provider filed ST–3 Returns by wrongly including Negative list item-sale of goods turnover of ₹ 9.5 crores to the taxable service and claimed exemption by giving Notification No.7 of 2015 .

On ₹ 1.5 crores man power supply also, the assessee has claimed 100% abatement in ST-3 Returns by giving notification No.30/2012 item No.10 instead of Sl No.8. The mistakes were pointed out by the AG AUDIT PARTY. AC has issued show cause Notice with demand of around ₹ 1.8 crores saying that he is not entitled to the exemptions as mentioned in ST-3 RETURNS in respect of the services provided U/s Section 65(39a) and Section 65(64) – Erection, commissioning and Maintenance or Repair Service to Mobile companies

It is only disclosure mistake - the Sales Turnover suffered VAT Tax and the claim of 100% abatement on man power supply is also correct except giving wrong S.No.10 instead S.No.8 in ST3 Return.

Are there any case laws supporting the above facts where the department cannot levy service tax just for claiming exemptions/ abatements under wrong notification number in returns when the assessee can prove his claims with documentary evidence?

Please give your valuable advice with case laws, if any, in satisfying the A.C that the sales already suffered VAT and claim of abatement is also correct except giving wrong exemption notification No in ST-3 Returns and there cannot be service tax demand just for disclosure mistakes.

Service provider faces tax demand after ST-3 return error; experts argue procedural lapses shouldn't negate exemptions. A service provider mistakenly included a non-taxable item in their ST-3 return and claimed exemptions using incorrect notification numbers. The AG Audit Party identified these errors, leading to a show cause notice demanding approximately 1.8 crores, arguing the provider was not entitled to the exemptions claimed. Several forum participants advised that procedural errors, such as incorrect notification numbers, should not result in tax demands if no tax evasion occurred. They suggested providing documentation to support the claims and referenced case laws where procedural lapses did not negate exemption benefits. The consensus was that the notice might not be sustainable under service tax law. (AI Summary)
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