Issue of SCN - Service tax with interest deposited before SCN issued

[JainPal Jain]

Can anybody enligthen me that why the TRibunal/ Service Tax Deptt. issues show cause notice when the service tax alongwith interest has been deposited before the issue of show cause notice. Why the simple reading of Section 73(3) is not followed by the authorities?

[Rama Krishana]

It is unfortunate and our legislature has drafted the provisions of section 73(3) as against the real intention of the law and therefore, the service tax department is taking the benefit of the same. The provisions are read in the matter that, if your case is subject to the extended period of limitation beyond one year, the provisions of section 73(3) shall not apply. Therefore, if you see the allegations in the SCN issued demanding service tax with interest and penalty, you will find that there is an allegation for suppression of facts or misrepresentation or fraud etc. to invoke the extended period of limitation. Therefore, you have no option but to fight the case before the appropriate authorities tribunal. Here I would like to correct you that tribunal never issues a show cause notice.

[Rakesh Chitkara]

Just the arrogant mind set that ignores their own laws. Sheer waste of time for all concerned. That is why quashing rate of such cases is 90% or above in CESTAT.

AI Summary

Debate on Service Tax Show Cause Notices Issued Despite Pre-Issuance Payments; Section 73(3) Interpretation Questioned. A discussion in a forum addresses the issue of why show cause notices (SCNs) are issued by the Service Tax Department even when service tax and interest have been paid before the SCN is issued. One participant explains that the authorities interpret Section 73(3) to allow SCNs if the extended limitation period applies due to alleged suppression or fraud. Another participant criticizes the authorities for disregarding the law, leading to a high rate of SCN quashing by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).