Please Wait ..

Sign-in to your account


Username:
Password:

Remember Me

Forgot your password?

Sign-up now



Join CAclubindia.com and Share your Knowledge. Registered members get a chance to interact at Forum, Ask Query, Comment etc.


Discussion > Service Tax >

SERVICE TAX - LIMITATION PERIOD

    Post New Topic
Pages : 1







[ Scorecard : 19]
Posted On 10 May 2007 at 16:20 Report Abuse

Is there any limitation period under service tax act for rasing of demand by the govt. In one case my client has written letter to the deptt sekking applicability of ST on their services around 2 yrs ago. No reply was recd.  Now deptt has issued SCN for the ST amount alongwith interest & penalty for two years. Is there any remedy?

Moreover if writing such letter to deptt is of any help can i get the proforma for the same?

Thanx & rgds

Varun


Online classes for CA CS CMA



Dilip Darji


[ Scorecard : 300]
Posted On 10 May 2007 at 16:20

Section 73 of Finance Act, 1994, is self explanatory.
SECTION [73. Recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded. — (1) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, [Central Excise Officer] may, within one year from the relevant date, serve notice on the person chargeable with the service tax which has not been levied or paid or which has been short-levied or short-paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice :

Provided that where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of —

(a)      fraud; or

(b)      collusion; or

(c)      wilful mis-statement; or

(d)     suppression of facts; or

(e)      contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax,

by the person chargeable with the service tax or his agent, the provisions of this sub-section shall have effect, as if, for the words “one year”, the words “five years” had been substituted.

Explanation. — Where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of one year or five years, as the case may be.

(2) The [Central Excise Officer] shall, after considering the representation, if any, made by the person on whom notice is served under sub-section (1), determine the amount of service tax due from, or erroneously refunded to, such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined.

(3) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person chargeable with the service tax, or the person to whom such tax refund has erroneously been made, may pay the amount of such service tax, chargeable or erroneously refunded, on the basis of his own ascertainment thereof, or on the basis of tax ascertained by a Central Excise Officer before service of notice on him under sub-section (1) in respect of such service tax, and inform the [Central Excise Officer] of such payment in writing, who, on receipt of such information shall not serve any notice under sub-section (1) in respect of the amount so paid :

Provided that the [Central Excise Officer] may determine the amount of short-payment of service tax or erroneously refunded service tax, if any, which in his opinion has not been paid by such person and, then, the [Central Excise Officer] shall proceed to recover such amount in the manner specified in this section, and the period of “one year” referred to in sub-section (1) shall be counted from the date of receipt of such information of payment.

Explanation. — For the removal of doubts, it is hereby declared that the interest under section 75 shall be payable on the amount paid by the person under this sub-section and also on the amount of short payment of service tax or erroneously refunded service tax, if any, as may be determined by the [Central Excise Officer], but for this sub-section.

(4) Nothing contained in sub-section (3) shall apply to a case where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of —

(a)      fraud; or

(b)      collusion; or

(c)      wilful mis-statement; or

(d)     suppression of facts; or

(e)      contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax.

(5) The provisions of sub-section (3) shall not apply to any case where the service tax had become payable or ought to have been paid before the 14th day of May, 2003.

(6) For the purposes of this section, “relevant date” means, —

(i)       in the case of taxable service in respect of which service tax has not been levied or paid or has been short-levied or short-paid —

(a)      where under the rules made under this Chapter, a periodical return, showing particulars of service tax paid during the period to which the said return relates, is to be filed by an assessee, the date on which such return is so filed;

(b)      where no periodical return as aforesaid is filed, the last date on which such return is to be filed under the said rules;

(c)      in any other case, the date on which the service tax is to be paid under this Chapter or the rules made thereunder;

(ii)     in a case where the service tax is provisionally assessed under this Chapter or the rules made thereunder, the date of adjustment of the service tax after the final assessment thereof;

(iii)    in a case where any sum, relating to service tax, has erroneously been refunded, the date of such refund.]





Sanjay Dwivedi
Advocate & Consultant


[ Scorecard : 139]
Posted On 10 May 2007 at 16:20

Dear Sir,

Stated simply:
-     Normally the notice demanding tax should be served within one year.
-     If the tax was evaded by fraud, wilful mis-statement, suppression of facts, etc. then notice can be served within 5 years.

The logic is that if the department was aware of the facts and still differed from opinion of the assessee, then the department has lesser time (one year) to raise a demand. But if the facts were hidden from the department, it has been given more time (five years) to detect, investigate and issue notice.

The limitation period is counted from a date defined as ‘relevant date’. Practically in most cases, it is the date on which return for the period is to be filed.

Example: Return for Oct 04 to March 05 was to be filed by 25th April 2005. A notice served on or before 24th April 2006 would be considered within one year even for the period Oct 04 to March 05.

[Prior to budget 2004-05, Sec 73 was worded differently.]

Thanks,
Sanjay Dwivedi



Sanjay Dwivedi
Advocate & Consultant


[ Scorecard : 139]
Posted On 10 May 2007 at 16:20

Dear Sir,

Stated simply:
-     Normally the notice demanding tax should be served within one year.
-     If the tax was evaded by fraud, wilful mis-statement, suppression of facts, etc. then notice can be served within 5 years.

The logic is that if the department was aware of the facts and still differed from opinion of the assessee, then the department has lesser time (one year) to raise a demand. But if the facts were hidden from the department, it has been given more time (five years) to detect, investigate and issue notice.

The limitation period is counted from a date defined as ‘relevant date’. Practically in most cases, it is the date on which return for the period is to be filed.

Example: Return for Oct 04 to March 05 was to be filed by 25th April 2005. A notice served on or before 24th April 2006 would be considered within one year even for the period Oct 04 to March 05.

[Prior to budget 2004-05, Sec 73 was worded differently.]

Thanks,
Sanjay Dwivedi



Dilip Darji


[ Scorecard : 13]
Posted On 10 May 2007 at 16:20

As long as you have discoled all facts before your Service Tax Authorities, Service Tax Authorities cannot demand Service Tax for more than one year old issues. If there is no reply to your letter till one yerar, SCN issued by Service Tax Authorities is bad in law.

Such incorrect SCN, is liable to be dropped. However, if the same has beeb issued, you are required to file reply to such SCN, appear for hearing before adjudicating authority and foloow all required legal proceedings.

But is it not a question of worry. Such SCN is liable to be dropped.


There are 4 Replies to this message





Related Files








Related Threads


Post your reply for SERVICE TAX - LIMITATION PERIOD



Your are not logged in . Please login to post replies

Click here to login


Not a member yet ?? Click here to signup

Message







    

  • Use thank button to convey your appreciation.
  • Maintain professionalism while posting and replying to topics.
  • Try to add value with your each post.




Forum Home | Forum Portal | Member Control Center | Who is Where | Popular Threads | Today's Topic | Recent Posts | Today's Posts | Post New Topic | Thread With Files | Top Threads This Month | Forum Stats | Unreplied Threads

back to the top