Determination of liability of service tax on the basis of payment certificate

[Sudhir Kumar]

On the basis of payment certificate for the period 2017-18, can it be possible to decide the payment made for the period April 2017 to June 2017 (Service Tax period). Whether the Sale. Tax deduction shown in Payment Certificate shall be assumed that the payment is pertaining to the period of S.Tax i.e before implementation of GST and on the basis of such details exemption befefit for the period April 2017 to June 2017 could be claimed.

The client have only payment certificate for the period 2017-18 received from the government organisation in lieu of providing exempted service as defined under Notification No. 25/2012-ST dated 20.06.2012. But the department have not considered the payment voucher date reflected in payment certificate after 30.06.2017 and issued a demand of Service Tax. The department seek agreement copy but as of now such agreement is not lie with the client. Further, the department has given benefit of exemption against only those payment which voucher date was before 01.07.2017. However, the client have provided exempted service.

Whether the department's move to issue the notice and adjudicate the case is correct. What the remedies are available for the clients now.

Please guide

[Shilpi Jain]

Looks like some factual aspects are missing. What is the transaction, what is the issue can be put forth

[KASTURI SETHI]

As per the judgement of the Supreme Court, the burden of proof  regarding correctly availed exemption is cast upon the Service Tax assessee/Service Provider.

The issue of payment certificate will come into play later on. First ensure that exemption from Service Tax has been correctly availed or not.

The definition of 'Govt.' did not remain same during the relevant period involved here. 

At present, the Department's stand is legally correct. It is statutory duty/function of the Govt. Officer to  safeguard Govt. revenue. 

[KASTURI SETHI]

""The department seek agreement copy but as of now such agreement is not lying  with the client"..

           . There are different types  of  valid contracts as per  Indian Contract Act, 1872.

             You can take help of ''implied contract''. 

AI Summary

Burden of proof on service provider supports scrutiny of service tax exemption claims; payment certificates are secondary evidence. The central dispute is whether a government payment certificate can establish that payments pertain to the pre GST service tax period and support exemption under Notification No. 25/2012 ST; the department has confined exemption to vouchers dated before the transition cut off, issued a demand for later vouchers, and sought the underlying agreement which the client lacks. Advisers emphasize that the burden of proof to substantiate exemptions lies with the service provider, that payment certificates are secondary evidentiary material to be considered later, and that reliance on an implied contract may be explored when a written agreement is unavailable.