Bombay HC: Stayed the Service Tax demand notice issued to CA based on ITR

Last updated: 30 January 2021

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Quick Summary

The Bombay High Court has put a hold on a service tax demand notice issued to a Chartered Accountant. The notice was based on information from the CA's firm's Income Tax Returns, with the Revenue Department believing remuneration received was subject to unpaid service tax. The court has issued a notice to the Revenue Department and stayed the demand notice pending further hearing.

Court :
Bombay High Court

Brief :
The Hon'ble Bombay High Court in Amrish Rameshchandra Shah v. the Union of India &ors. [Writ Petition (L) No. 2103 o 2021, dated January 27, 2021] stayed the show cause-cum-demand notice issued to a Chartered Accountant in a Writ Petition challenging the service tax demand based on Income Tax Returns ("ITR") data and issued notice to the Revenue Department ("Respondent").

Citation :
Amrish Rameshchandra Shah v. the Union of India &ors. [Writ Petition (L) No. 2103 o 2021, dated January 27, 2021]

The Hon'ble Bombay High Court in Amrish Rameshchandra Shah v. the Union of India &ors. [Writ Petition (L) No. 2103 o 2021, dated January 27, 2021] stayed the show cause-cum-demand notice issued to a Chartered Accountant in a Writ Petition challenging the service tax demand based on Income Tax Returns ("ITR") data and issued notice to the Revenue Department ("Respondent").

Facts

This Writ Petition has been filed by AmrishRameshchandra Shah ("Petitioner"/"Assessee"), a Chartered Accountant by profession and a partner in a firm, wherein the Assessee was served with a show cause-cum-demand notice dated December 30, 2020, based on the ITR filed by firm for the relevant year and the Respondent was of view that the remuneration received by Assessee from the firm is subject to service tax that has not been paid.

Petitioner has referred to a decision of the Hon'ble CESTAT, Bangalore in Alpa Management Consultants P. Ltd. Vs. Commissioner of Service Tax [2007(6) S.T.R. 181], where it was held that service tax cannot be recovered based on the figures shown in the ITR.

Issue

Whether show cause-cum-demand notice for recovery of service tax can be issued based on ITR.

Held

The Hon'ble Bombay High Court in Writ Petition (L) No. 2103 of 2021, dated January 27, 2021 held as under:

Issued notice to the Respondents to file their reply by the next date.
Stayed the impugned show cause-cum-demand notice dated December 30, 2020.
Listed the matter on March 15, 2021 for the hearing.

FAQ :

The case concerned whether a show cause-cum-demand notice for service tax could be issued solely based on figures reported in an Income Tax Return (ITR).

The Writ Petition was filed by Amrish Rameshchandra Shah, a Chartered Accountant and partner in a firm.

The notice was issued based on the Income Tax Returns filed by the Chartered Accountant's firm, with the Revenue Department asserting that remuneration received by the CA was subject to unpaid service tax.

The Hon'ble Bombay High Court stayed the show cause-cum-demand notice and issued notice to the Revenue Department, requiring them to file a reply.

No, the notice has been stayed, meaning it is temporarily suspended. The matter is listed for further hearing.

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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