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

Service tax limitation invoked where alleged suppression permits SCNs despite pre-payment, requiring challenge of extended limitation claims. Authorities issue show cause notices despite prior payment of service tax and interest by invoking the exclusion for matters subject to an extended limitation period and alleging suppression, misrepresentation or fraud to sustain demands for tax, interest and penalty; taxpayers must contest the factual basis for the extended limitation exclusion and resultant penalty through the administrative and appellate process, while tribunals do not issue show cause notices.