https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=462024 https://www.taxtmi.com/caselaws?id=462024 Rejection of VCES declaration - independent identity of proprietorship concern from its proprietor - applicability of Best Judgment method enumerated in Section 72 of the Finance Act,1994 - non-determination of Service Tax dues correctly with an intent to evade payment of Service Tax - levy of penalties. Whether a proprietorship concern has an identity independent of its proprietor? - HELD THAT:- There are no merits in any submissions which run contrary to the preposition that proprietorship concern has no independent identity. It has the identity of the proprietor. Commissioner has in the impugned order referred to series of decisions holding so. Hon'ble Allahabad High Court has in case of Manoj Singh [2019 (5) TMI 796 - ALLAHABAD HIGH COURT] observed that 'proprietary concern is not a company. Company in terms of the Explanation appended to Section 141 of the Negotiable Instruments Act, means any body corporate and includes a firm or other association of individuals. Director has been defined to mean in relation to a firm, a partner in the firm. Thus, whereas in relation to a company, incorporated and registered under the Companies Act, 1956 or any other statute, a person as a Director must come within the purview of the said description, so far as a firm is concerned, the same would carry the same meaning as contained in the Partnership Act.' - The preposition to the effect whereby appellant has sought to argue on the basis of two his firms being registered separately with the service tax authority would not support the case of the appellant as both the firm in their registration certificate have common PAN identifier, identifying them with the sole proprietor. It is evident from the ST-2 filed by the appellant that he had been providing same services from the same premises under the guise of two separately registered entities. Whether the Best Judgment method enumerated in Section 72 of the Finance Act, 1994 may be applied to present proceedings? - HELD THAT:- Undoubtedly appellant has not filed the ST-3 returns regularly by the prescribed date and have not assessed the tax liability on the receipts made. The fact of the appellant having not filed or irregularly filing the return beyond the due date is noted in the impugned order and also penalties have been imposed for the same in manner as prescribed by the Finance Act, 1994. In such a situation resort made to the provisions of Section 72 prescribing for best judgement assessment cannot be faulted with - there are no merits in the submissions made by the appellant challenging findings arrived in the impugned order on the basis of best judgement assessment made as per section 72 of the Finance Act, 1994. Whether Shri Uday Veer Singh had not determined his Service Tax dues correctly with an intent to evade payment of Service Tax? - HELD THAT:- From the perusal of the above reconciliation filed by the appellant duly certified by the Chartered Accountant in the court and it is found that amount of the service tax short paid by the appellant during the entire period of dispute has been show as same. The reconciliation made by the Chartered Accountant on the basis of the books of account in fact certifies the calculations made by the adjudicating authority in para 3.31 of the impugned order. As the figures in the impugned order have been reconciled with the books of account there are no reason to doubt the correctness of figures arrived in the para 3.31 of impugned order and hold that appellant had in fact evaded the payment of this amount as service tax. Whether the demand should remain limited to the period covered in the VCES declaration filed by the noticee? - HELD THAT:- It is evident that mere filing of declaration under VCES scheme is not sufficient the same could have been rejected if found substantially false and proceedings initiated against the declarant in respect of the tax not paid or short paid. In present case when in the view of revenue appellant had short paid the service tax, then proceedings as per the above referred section have been contemplated. There are nothing wrong in the proceedings initiated against the appellant. Hon'ble Madhya Pradesh High Court has in the case of Yashwant Agrawal & Co. [2017 (2) TMI 1074 - MADHYA PRADESH HIGH COURT] observed that 'In the present case, petitioner submitted a declaration form in which he had wrongly declared that no inquiry or investigation or audit is pending against him which is a basic disqualification to avail the benefit of the Scheme, therefore, by virtue of Section 106 the declaration submitted by the petitioner was liable to be rejected. Section 101 is applicable to a situation where the assessee is entitled for availing the benefit of the Scheme, however, the issue in respect of tax dues not paid or short-paid is involved and in such a situation the limitation period of one year is provided. If the issue of entitlement to avail the Scheme is to be decided then provisions of Section 106 would apply and in the present case respondents/authority has rightly exercised the powers under Section 106 by passing the impugned order dated 16-10- 2014.' Appellant have contended that the demand made on the basis of the book of accounts cannot be justified without co- relating the same with specific transaction. The book of accounts are the statutory documents made by the appellant. Balance Sheet and Profit & Loss accounts are made on the basis of entries in the book of accounts which are also required to be statutorily audited. The entries in the book of accounts could not have been brushed aside on the basis of the above submission specifically when the reconciliation made by the qualified Chartered Accountant certifies the same. The demand made on the basis of the entries in such book of accounts after allowing for all the possible adjustment cannot be set aside in absence of anything contrary on record. Levy of penalties - HELD THAT:- The appellant have suppressed the information with intent to evade payment of Service Tax, penalty imposed on the appellant under Section 78 is upheld in view of the decisions of Hon'ble Apex Court in case of Rajasthan State Spinning and Weaving Mills Ltd. [2009 (5) TMI 15 - SUPREME COURT] - penalties for various contraventions imposed under section 77 (1), 77 (1) (b) & 77 (1) (c) of Finance Act, 1994 along with penalty imposed under Rule 7 (C) of the Service Tax Rules, 1994 upheld. Conclusion - i) The appellant is the sole person liable for the service tax dues of both proprietary concerns. ii) Best judgment assessment under Section 72 was rightly applied to determine suppressed service tax dues. iii) The appellant suppressed taxable value and evaded payment of service tax with intent, justifying demand, interest, and penalties. iv) The VCES declaration filed was substantially false and immunity under Section 108 was withdrawn. v) Amounts collected as service tax but not deposited are recoverable under Section 73A. vi) Penalties under Sections 78, 77 and Rule 7(C) of Service Tax Rules, 1994 are validly imposed. Appeal is dismissed. Case-Laws Service Tax Wed, 21 Aug 2024 00:00:00 +0530