TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 218
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....e added tax (for short, 'VAT') up to the date on which it subsisted i.e., up to 30-06-2017 and is said to have been paying GST from its onset on 01-07-2017. The assessee was earlier in the business of maintenance and repairs of computers and had obtained a service tax registration for the said business of maintenance and repair of computers and copying machines. From the financial year 2013-14, the assessee surrendered his service tax registration for the business of maintenance and repairs and switched over to the business of sale and marketing of computers and copying machines. These are the averments in the petition. 3.2. After about 5 years, between the dates 23-10-2019 and 14-10-2020, several communications are issued by the Superintendent of Central Tax seeking various documents and details pertaining to Form ST-3 returns, P & L Account and Balance Sheet and Form 26AS for the assessment year 2015-16. The petitioner is said to have complied with those directions. Notwithstanding the same, on 18-12-2020 the respondent issues a show cause notice calling upon the petitioner/assessee to show cause as to why service tax should not be determined against him along with penalty for....
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....ssessee to bring about all the facts. The revenue becomes aware only at a later point in time and issues show cause notice. Since suppression is the ground on which proceedings have sprung, the limitation is not thirty months, but it is five years. The demand is well within five years. He would seek dismissal of the petition. 6. I have given my anxious consideration to the submissions made by the respective learned counsel and have perused the material on record. 7. The afore-narrated facts are not in dispute. The petitioner initially was engaged in the business of maintenance and repairs of computers. He was assessed to VAT on the sale of goods up to 30-06-2017 and later subjected to tax under the GST regime. It is not the case of the revenue that VAT has been short paid by the petitioner. It is the case of the revenue that service tax has been short paid. Therefore, it is necessary to notice the genesis of the proceedings when the revenue issued a show cause-cum-demand notice which triggered the entire issue in the case at hand. An electronic mail is said to have been communicated to the petitioner seeking to explain as to why, turn over for the financial year 2015-16 had n....
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....ated that - in the middle of the year of 2013-14 they have closed the Service Tax registration and don't have the copy of it. 05.2 Whereas from the P&L Account for the period 2015- 16, it is observed that he has received an amount of Rs. 16,73,969/- as Contract receipts. Hence, not satisfied with the compliance submitted by the assessee, the Superintendent called for further details viz. P&L etc. for the period 2016-17 and 2017-18 vide mail dated 27/11/2020. 05.3 In response assessee submitted the P&L account for further period from 2016-17 and 2017-18 through mail. 05.4 It is observed from P&L account for the period 2016-17, it is observed that he has received an amount of Rs. 38,22,524/- as Contract receipts, and for the period 2017-18 he has received an amount of Rs. 3,79,511/- as Contract receipts. Since the Assesee did not submit the contract receipts month-wise for the period 2017-18 contract receipts for whole year is taken into account. 05.5 Hence, from the above this, it appears that the assessee has deliberately suppressed a part of the taxable value for the financial year 2015-16 with intent to evade payment of service tax. It appears ....
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....Tax Rules, 1994 read with Section 70 of the Finance Act, 1994. The Service Provider is required to correctly assess their Service Tax liability and discharge it within the prescribed dates. It places greater onus on the service provider in this trust based regime to conform to the highest standards of integrity in disclosure of information in the statutory returns. Thus the entire responsibility of making disclosure of rendering a service voluntarily is on the service provider under the system of self-assessment. The said evasion of Service Tax would not have come to light but for the investigations conducted by the Department. 07.2 Therefore, in view of the above, it appears that Service Tax of Rs. 8,73,031/-(inclusive of all Cesses) for the period from 01.04.2015 to 31.03.2018, is liable to be recoverable from the assessee by invocation of extended period under proviso to Section 73(1) of the Finance Act, 1994. 08. Other Contraventions: Whereas, the assessee, in view of the above omissions and commissions, has also appears to have contravened the following provisions of the Finance Act, 1994 and Service Tax Rules, 1994: 08.1 The assessee has fa....
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....r-2015 25/10/2015 Not filed October-March-2016 25/04/2016 Not filed 2016-17 April-September-2016 25/10/2016 Not filed October-March-2017 25/04/2017 Not filed 2017-18 April-June-2017 15-08-2017 Not filed Whereas, since the assessee failed to file any Form ST-3 Return for the said period it appears that in terms of Section 70 of the Finance Act, 1994 read with Rule 7C of the Service Tax Rules, 1994 the assessee is liable for maximum late fee of Rs. 20,000/- for each for such returns, totalling to Rs. 1,00,000/- (Rs. 20,000 X 5). 08.3 Whereas, it appears that the assessee, have violated the provisions of Section 88 of the Act read with Rule 6 of the Service Tax Rules, 1994, in as much as they have suppressed the fact of rendering of taxable services valued at Rs. 58,76,004/- during the period April, 2015 to March, 2018, hence have wilfully mis-stated the taxable value to that extent in the Form ST-3 returns filed for the said period with an intention to evade payment of Service Tax on it amounting to Rs. 8,73,031/- (inclusive of all Cesses). Hence, it appears that they have rendered themselves liable....
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.... instituted, whether before, on or after the appointed day, under the existing law, any amount of tax, interest, fine or penalty becomes recoverable from the person, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under CGST Act, 2017 and the amount so recovered shall not be admissible as input tax credit under CGST Act 2017. 12. The assessee may also like to opt for settlement of case in terms of provisions contained under Chapter V of the Central Excised Act, 1944, which, is made applicable to the Service Tax matters by Section 83 of the Finance Act, 1994, subject to fulfilment of conditions contained in the respective Act. 13. The assessee, are further required to produce at the time of showing cause all the evidence upon which they intend to rely in support of their defence. The assessee should indicate in their written reply as to whether they desire to be heard in person before the case in adjudicated. If no mention is made in their written reply to the Show Cause Notice, it would be presumed that they do not desire to be heard in person. 13. If no cause is shown against the action proposed to be taken withi....
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....like to clarify that despite their categorization, my transactions are strictly related to the supply of goods and not the provision of services. I am in communication with these customers to rectify this misclassification and ensure accurate reporting in the future. I kindly request a fair consideration of my case based on the evidence provided and humbly request you to drop the further proceedings. Thanking you Yours faith fully Gauribidanur Venkatakrishna Kumar (Proprietor) Date: 28-08-2023 Place: Hubballi." (Emphasis added at each instance) 8. A perusal at the show cause notice or the demand notice would indicate that for the first time the jurisdictional Range Officer had communicated in electronic mail asking the assessee to explain the difference of Rs.16,73,969/- for the year 2015-16. The mail was on 23-10-2019 and the show cause notice is on 18-12-2020. Therefore, the notice admittedly is issued after thirty months. It, therefore, becomes necessary to notice the bar in the jurisdiction as obtaining under Section 73(1) of the Act. Section 73(1) reads as follows: "73. Recovery of service tax not levie....
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....e present case as it is not disputed that the respondent had regularly paid amount towards value added tax liability in respect of the subject goods during the relevant period, the question of claiming service tax thereon does not arise. 3. Accordingly, in the facts of the present case, the civil appeal is dismissed." 9. The further case of the revenue is that when possession of goods is transferred with effective control on the said goods, there is deemed sale. The revenue seeks to contend that the transfer of maintenance and services to another establishment would indicate that it is deemed sale and service tax would become applicable. The Madras High Court considers an identical circumstance and holds that what would be chargeable to VAT would be under the Sales Tax law and not service tax as demanded. The Madras High Court in ANANDCINE SERVICE (P) LTD. v. COMMISSIONER OF SERVICE TAX-II, CHENNAI 2025 SCC OnLine Mad 2282, holds as follows: ".... .... .... 19. The clauses in the agreement, reproduced above, make it clear that the possession and effective control has been transferred. If it is not so, why will the owner reserve a right to inspect the e....
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....ere should be transfer of the rights to use the goods for valuable consideration. Factually, there has been." 10. The Apex Court, long before the onset of GST regime had considered the interplay between service tax and value added tax in IMAGIC CREATIVE (P) LTD. v. COMMISSIONER OF COMMERCIAL TAXES (2008) 2 SCC 614 and the observations of the Apex Court was that Service Tax and VAT are mutually exclusive. Therefore, they should be held to be applicable having regard to the parameters of Service Tax and the Sales Tax. The Apex Court has held as follows: ".... .... .... 32. Payments of service tax as also VAT are mutually exclusive. Therefore, they should be held to be applicable having regard to the respective parameters of service tax and the sales tax as envisaged in a composite contract as contradistinguished from an indivisible contract. It may consist of different elements providing for attracting different nature of levy. It is, therefore, difficult to hold that in a case of this nature, sales tax would be payable on the value of the entire contract, irrespective of the element of service provided. The approach of the assessing authority, to us, thus, appea....
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.... GODREJ SARA LEE LIMITED v. EXCISE AND TAXATION OFFICER-CUM-ASSESSING AUTHORITY 2023 SCC OnLine SC 95 wherein the Apex Court has held as follows: ".... .... .... 4. Before answering the questions, we feel the urge to say a few words on the exercise of writ powers conferred by article 226 of the Constitution having come across certain orders passed by the High Courts holding writ petitions as "not maintainable" merely because the alternative remedy provided by the relevant statutes has not been pursued by the parties desirous of invocation of the writ jurisdiction. The power to issue prerogative writs under article 226 is plenary in nature. Any limitation on the exercise of such power must be traceable in the Constitution itself. Profitable reference in this regard may be made to article 329 and ordainments of other similarly worded articles in the Constitution. Article 226 does not, in terms, impose any limitation or restraint on the exercise of power to issue writs. While it is true that exercise of writ powers despite availability of a remedy under the very statute which has been invoked and has given rise to the action impugned in the writ petition ought not to....
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....he dawn of the Constitution, a Constitution Bench of this Court in its decision reported in [1958] SCR 595 (State of Uttar Pradesh v. Mohammad Nooh) had the occasion to observe as follows : "10. In the next place it must be borne in mind that there is no rule, with regard to certiorari as there is with mandamus, that it will lie only where there is no other equally effective remedy. It is well established that, provided the requisite grounds exist, certiorari will lie although a right of appeal has been conferred by statute, (Halsbury's Laws of England, 3rd Edn., Vol. 11, p. 130 and the cases cited there). The fact that the aggrieved party has another and adequate remedy may be taken into consideration by the superior court in arriving at a conclusion as to whether it should, in exercise of its discretion, issue a writ of certiorari to quash the proceedings and decisions of inferior courts subordinate to it and ordinarily the superior court will decline to interfere until the aggrieved party has exhausted his other statutory remedies, if any. But this rule requiring the exhaustion of statutory remedies before the writ will be granted is a rule of policy, convenience and di....