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=772898 https://www.taxtmi.com/caselaws?id=772898 Recovery of service tax with interest and penalty - short-payment/non-payment of service tax - service tax demand raised for the financial year 2014-15 based on data received from the Income Tax Department - demand for the period March, 2014 to September, 2014 for which the return was due and filed in the month of October, 2014 has been made beyond the period of 5 years as the show cause notice has been issued on 30.12.2020 - extended period of limitation - HELD THAT:- As per proviso to sub section (1) to Section 73 off the Finance Act, 1994, the relevant date for computing the period of limitation starts from the date of filing of return. Once ST-3 return was filed on 23.10.2014 the 5 year period from that date would be on 22.10.2019 and no notice invoking even extended period of limitation could have been issued for making demand for this period. Thus, the submissions made by the Counsel for appellant is agreed upon that demand for this period being beyond 5 years period is barred by limitation. For the period from October, 2014 to March, 2015 the demand could have been made within 5 years from the due date for filing the return in present case. It is observed that appellant had for this period not filed any return. On account of the extraordinary circumstances/situations from 15th March, 2020 Hon'ble Supreme Court has sustained the period of limitations for all the proceedings vide order made in the Suo-moto Writ Petition No.3 of 2020 [2021 (3) TMI 497 - SC ORDER] wherein it has been held that 'In computing the period of limitation for any suit, appeal, application or proceeding, the period from 15.03.2020 till 14.03.2021 shall stand excluded.' In terms of para 2(2) of the above order, the period of limitation would have been 90 days from 15.03.2021. Thus, there are no merits in his submissions made in this regard. The reliance placed by the appellant on the circular dated 20.07.2021 wherein it was clarified that Supreme Court decision may not apply. However, there are no merits in the said submission because Government vide Section 6 of Taxation and Law Acts, 2020 read with Notification No.450/61/2020-Cus.IV(Part-I) dated September 30, 2020 had clarified that only on 31.12.2020 in all such cases and show cause notices in the present case has admittedly served upon the appellant on 30.12.2020. So for the period from October, 2014 to March, 2015 the show cause notice has been rightly issued within the period of limitation as prescribed read alongwith the decision of Hon'ble Supreme Court and Taxation and other Laws, 2020. Thus, it is evident that appellant was provided services on which 50% of the taxes were being paid by the service receiver and appellant was required to pay service tax of only 50%. All these facts should have been taken into account while demanding the tax liability for the period from October, 2014 to March, 2015 Commissioner (Appeals) have taken note of these documents but has not render any findings, nor he has given any relief to the appellant in this regard. For the purpose of examining these documents and re-determining the tax liability in accordance with the above invoices and circular, the matter is remanded back to the Original Authority for rendering suitable findings in this regards. The appellant had provided all these documents to his advocate/accountant for filing the return in due time which has due to ignorance of advocate/accountant not filed by the said advocate/accountant in time. This is a fit case where such ignorance would not be made a reason for imposition of penalty on the appellant under Section 78 of the Act and the same is set aside 0 the late fee imposed on the appellant under Section 70 of the Finance Act, 1994 reduced to Rs 10,000/-. Conclusion - i) The service tax demand based on Income Tax data is sustainable and valid. ii) The extended period of limitation and penalty under Section 78 are validly invoked and imposed. iii) Interest on the service tax demand is rightly imposed. iv) Late fees and penalty for non-filing are valid but reduced in amount; penalty under Section 78 is set aside due to mitigating circumstances. v) The limitation period extension due to COVID-19 applies, and the show cause notice was timely issued. The matter is remanded back to Original Authority for re-determination of the tax liability - Appeal is partly allowed and matter is remanded back to Original Authority. Case-Laws Service Tax Tue, 22 Apr 2025 00:00:00 +0530