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A notice has been issued by the CGST department for FY 2015-16 stating there is a mismatch between the income tax return and service tax.
In our case we aren't registered with service tax department .
Can the notice is being challenged stating the notice has been issued beyond the limitation period of 18 months.
Since it is not a case of fraud or suppression may be a case of ignorance of the law.
Your response is highly appreciated.
Thanks Avnish Khan
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Yes. It must be challenged. Suppression of facts with an intent to evade payment of tax cannot be established by the department. Burden of proof is on the department and not on you.There are so many case laws in your favour.
One person approached me who is has done daily labour work for building and in his name TDS deducted and to get refund he has filed Income return. Now CGST issued a showcause notice to pay Service tax.
01. This client not received any service tax from the Mr. A builder.
02 During the same year another builder Mr. B daily labour work, he has paid service tax to the client and client discharged service and filed returns.
What to do now as he is not able to collect from Mr A builder and not have ability to discharge the liability.
Pl.post important contents of show cause notice. Without going through SCN, correct reply is not possible. So post important contents of SCN
Contents of the SCN are
01. On verification of the TDS deductions from Income Tax Department, it appears that assessee has received taxable amount from the receipient of services and tax payer appears to have not discharged the Service tax liability.
02. Quantification of Service tax - FY 2014-2015 - to be quantified, FY 2015-2016 - As per 26AS and Income tax return 4 - Gross Amount ₹ 1,13,28,837 & Tax is ₹ 16,42,681/-, FY 2016-2017 - to be quantified
03. From the available records it is demanded and recovered from the taxpayaer of ₹ 16,42,681,under the provisions of the Section 73(1) of the Finance Act.
03. Also Interest and penalty has to demanded U/s. 75, 76 and 77(2) for non filing of returns.
(i) What is the name/nature of service mentioned in the SCN ? What Accounting Code no. has been mentioned in the SCN ?
(ii) It appears that manpower supply service was provided. If it is so, what is the constitutional status of the builder (whether Ltd. Co., Pvt. Ltd or Proprietorship etc.) ?
Pl. clarify.
It is obvious that SCN has been issued by invoking extended period and the extended period can be invoked only if mala fide intention with an intent to evade payment of tax is involved The burden of proof is cast upon the department and not on you. There are case laws to this effect.
Can you please share the case laws
Sir,
01. In the SCN, No code is mentioned as it only mentioned that assessee not appeared/replied any notices, in the absence of nature of service, amount could not be ascertained, so amount not quantified and cited Board circular 1053/02/2017 dated 10/3/2017 and case Gwalior Rayon Mfg.v/s UOI = 1982 (4) TMI 68 - MADHYA PRADESH HIGH COURT.
02. It is Manpower/labour supply to Pvt ltd company by an Individual.
Dear Bayya reddy DK,
W.e.f. 1.4.15, 100% ST is to be paid by the service receiver under RCM. See Notification No.7/15-ST dated dated 1.3.15 effective from 1.4.15. This notification amends Notification no.30/12-ST dated 1.6.12. Prior to 1.4.15, 25% of ST was required to be paid by the Service Provider and 75% by Service Receiver.under RCM.
The period prior to October, 14 has become time barred.
Dear Avnish Khan,
Case laws regarding burden of proof are as follows:-
(i) 2009 (13) S.T.R. 655 (Tri. - Bang.) in the case of Chandra Shipping and Trading Services Vs. C.C.E. & C., VISAKHAPATNAM-II = 2008 (8) TMI 168 - CESTAT, BANGALORE.
(ii) Reported as 2008 (12) S.T.R. 730 (Tri. - Del.) = 2008 (8) TMI 50 - CESTAT NEW DELHI in the case of DEWSOFT OVERSEAS PVT. LTD. Vs. COMMR. OF SERVICE TAX, NEW DELHI.
Another case law on the issue of burden of proof :
Board's circular No.1053/2/17-CX dated 10.3.2017
3.2 Ingredients for extended period: Extended period can be invoked only when there are ingredients necessary to justify the demand for the extended period in a case leading to short payment or non-payment of tax. The onus of establishing that these ingredients are present in a given case is on revenue and these ingredients need to be clearly brought out in the Show Cause Notice alongwith evidence thereof. The active element of intent to evade duty by action or inaction needs to be present for invoking extended period.
3.3 The Apex Court‟s in the case of M/s Cosmic Dye chemical Vs Collector of Cen. Excise, Bombay [1995 (75) E.L.T. 721 (S.C.) = 1994 (9) TMI 86 - SUPREME COURT, has laid the law on the subject very clearly. The same is reproduced below for ease of reference.
Now so far as fraud and collusion are concerned, it is evident that the requisite intent, i.e., intent to evade duty is built into these very words. So far as mis-statement or suppression of facts are concerned, they are clearly qualified by the word “wilful” preceding the words “mis-statement or suppression of facts” which means with intent to evade duty. The next set of words “contravention of any of the provisions of this Act or Rules” are again qualified by the immediately following words “with intent to evade payment of duty”. It is, therefore, not correct to say that there can be a suppression or mis-statement of fact, which is not wilful and yet constitutes a permissible ground for the purpose of the proviso to Section 11A. Misstatement or suppression of fact must be wilful.
And Board's circulars are binding on the department----held by Hon'ble Supreme Court.
The efforts of Sri Kasturi Sir to resolve the query till the querist is satisfied is appreciable. Sir, you are an inspiration for us.
Kasturi Sir i have a doubt, Just like Mr. Avnish Khan i received a SCN from GST dept. stating that i need to pay service tax bcoz of mismatch in my ITR & 26AS. But i havent registered my business with ST Department as i wasnt aware about it. But at the same time i also havent taken any CENVAT credit. So if i havent take any credit then can my service tax demand be nullified? Can i take this ground in my reply to GST dept?
What was your taxable turnover during the period of demand ? What was service ?
Taxable turnover as per my p/l is 6,43,56,780. The dept have calculated tax on this amount. I constructed schools for some Christian community people/organisation. And i never took registration for the same thinking that its not required. And now they have charged 15% s.tax on the taxable turnover
No exemption from payment of Service Tax is available to construction of school building. This service was not covered under "Other Auxiliary Educational Services". There were changes w.e.f. 14.5.16 and 11.7.14. There is not even an iota of doubt about this. So you can save penalty to a large extent by Service Tax along with interest before /issuance /service of SCN. So contact the jurisdictional GST Range Officer in this contact. Service Tax laws will apply by virtue of saving Section 174 of CGST ACT.
Since SCN has been received by you, so you will have to deposit ST along with interest and 15 % penalty within 30 days of the receipt of SCN.
As per Section 78 (1) (ii) of the Finance Act, 1994, 75% of penalty can be saved if confirmed demand of Service Tax along with interest (whole)is paid within 30 days from the date of receipt of Order-in-Original.
As per Section 78 (1)(i), 85 % of penalty can be saved if whole Service Tax and interest demanded in the SCN is paid within 30 days of the date of receipt of SCN.
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