Service Tax Exemption to Small Service Providers

[KALPESH BHATT]

Hello Sir,

Thanks for your earlier reply.

However in SCN they stated that Income of ₹ 10 Lakhs has been suppressed deliberately and therefore tax is payable on it. Department has reviewed Form 26AS and compared it with form ST 3 and found the difference and accordingly raised the demand in SCN on ₹ 10 Lakhs stating that Income has been deliberately suppressed in ST return.

Hence can you please guide in submitting the appropriate reply.

Thanking You,

Kalpesh

[KASTURI SETHI]

Sh.Kalpesh Bhatt Ji,

Pl. let me know year-wise your ACTUAL turnover mention in ST-3 returns and Form 26 AS here. What is the date of registration with ST department ? If you have taken registration voluntarily before crossing turnover of Rs.ten lakhs, you were required to declare the whole income in ST-3 return and claim exemption in the said return. Pl. note that it is not GST.

In your case ST is not payable on the differential amount. Mismatching of ST-3 return with Form 26 AS does mean ST is payable on the suppressed amount. The department cannot deny threshold exemption in this scenario.

Your client has not suppressed taxable income.

For more clarification and fool proof guidance you can post the vital contents of the SCN here in this forum.

Or with permission from TMI you can email scanned copy of SCN. My email ID is in my profile. Choice is yours.

[KALPESH BHATT]

Thank you so much Sir

[Ganeshan Kalyani]

I agree with the views of Sri Kasturi Sir. The difference between ST and 26AS could be of threshold limit. If the threshold limit benefit is opted then that much turnover must not have furnished in ST return. If this is correct then justify the same to the dept.

AI Summary

Individual Accused of Suppressing Income Faces Tax Demand; Discrepancy Found Between Form 26AS and ST-3 Returns A discussion on a forum revolves around a service tax issue where an individual is accused of deliberately suppressing an income of 10 lakhs, leading to a tax demand. The department found discrepancies between Form 26AS and ST-3 returns. A respondent advises that if the individual registered voluntarily before exceeding 10 lakhs, they should have declared the entire income and claimed an exemption. It is suggested that the department cannot deny the threshold exemption, and the individual is encouraged to justify the discrepancy by explaining the threshold limit benefit. Another participant concurs with this advice.