Other provisions in service tax
1 Audit by department and CERA
¨ No audit if turnover less than 60 lakhs (but visit of preventive officers allowed).
¨ Be polite but firm. Be calm and patient
¨ Do not pay tax on ad hoc basis.
¨ If you are not sure about legal position, Correct answer is ‘We will do as required by law’, without making any commitment.
¨ Application within one year in form R
¨ No refund if unjust enrichment
¨ Amount should be shown as ‘receivable’ in financial accounts and not to be taken in P&L account to prove that you have not passed on the burden of tax to customer i.e. there is no unjust enrichment.
¨ Duty payable by self assessment.
¨ Demand within 18 months from date of return. Demand upto 5 years in case of suppression of facts, fraud, wilful misstatement
¨ Adjudication by CE officer. (In 99% cases, demand is confirmed)
¨ Powers of Adjudication, based on demand of duty – (a) Superintendent – ` one lakh (b) Deputy/Assistant Commissioner – ` five lakhs (c) Joint Commissioner and Additional Commissioner – ` fifty lakhs (d) Commissioner – without any upper limit.
¨ Full disclosure is the key to safety, to avoid charge of suppression of facts. Hence, wherever in doubt, all material facts should be disclosed to department.
4 No demand after payment of taxes with interest
¨ SCN cannot be issued after service tax with 18%/15% interest is paid
¨ This would be so even if service tax and interest is paid after audit by department or even raid by preventive people
¨ Section 73(3) prohibits issue of such notice
¨ Ignorance of law is an excuse. Mere non-payment of tax does not automatically lead to conclusion that there was suppression of facts.
¨ Heavy penalties for even procedural lapses
¨ Penalty can be reduced under section 80, except in case of fraud, suppression of facts, wilful misstatement etc.
¨ Penalty not payable if service tax and interest paid before show cause notice, except in case of fraud, misstatement etc.
¨ First appeal before Commissioner (Appeals) if adjudication order by Superintendent or Assistant or Deputy or Additional Commissioner
¨ Appeal to be filed within 2 months
¨ Appeal against order of Commissioner or Commissioner (Appeals) before Tribunal within three months.
¨ Appeal subject to condition of pre-deposit of service tax, interest, penalty etc. However, it can be waived for sufficient reasons.
7 Further Appeals
¨ Appeal to High Court on question of law (except in case of valuation and classification)
¨ Appeal to Supreme Court if issue of valuation and classification
¨ Writ remedy is available if other remedy is not sufficient
¨ Fine and imprisonment imposable for offences.
¨ No provision for arrest in service tax.
¨ Provision for arrest in customs and excise but offences are bailable.