Short payment of Service tax

[Murari Agrawal]

On the basis of data received from CBDT show cause notice has been issued for the period 2014-15 for recovery of alleged short payment of Service tax. The alleged suppressed taxable value is on account of charges received for manufacturing and supply of goods on Job Work basis. Inputs were received by challans under Rule 4(5)(a) of Cenvat Credit Rules,2004.

My queries are:

1) Am I correct to say that such activity is not liable to service tax being in the Negative List under section 66D of the Finance Act,1994.

2) Service tax return for Oct'14-March'15 period was filed on 17.04.2015 and even if extended period of limitation is invoked, is not the Show cause notice issued on 28.12.2020 barred by limitation.

3) The Show Cause Notice has been issued by the Assistant Commissioner and the direction is for showing cause to the same Officer. Can the notice server be the adjudicator.

Thanks

[KASTURI SETHI]

1. If process (job-work) amounts to manufacture, it will fall under negative list under Section 66 D (f) otherwise ST is applicable. (Elaborate process undertaken by the job worker).

2. Not time barred due to Covid-19. Extension granted for both (Govt. and assessees).

3. Yes.

AI Summary

Job work as manufacture determines service tax liability; pandemic tolling can extend limitation and the issuer may adjudicate. Whether payment for manufacturing and supply on a job work basis is taxable as a service depends on whether the process amounts to manufacture-if so, it falls under the negative list and is not a taxable service; otherwise service tax applies. Pandemic related extensions can toll limitation and preserve later show cause notices. The officer issuing the notice may also be the adjudicator, subject to procedural safeguards.