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ST - Tax collected but not deposited with Govt - finding by Commr(A) that there is no suppression as assessee has mentioned above factum in balance-sheet lacks merit - Revenue appeal allowed: CESTAT

By TIOL News Service

MUMBAI, JUNE 11, 2014: THIS is a Revenue appeal.

During the period 2006-07 and 2008-09 the respondent was providing photography services. On enquiry it was found that the respondent collected the service tax from the customers but did not deposit the same with the Government treasury and it was also found that they have not filed the service tax returns regularly.

In his statement, the proprietor admitted that they were collecting service tax but not paying the same to the government exchequer due to financial crisis. Thereafter, they paid the service tax through their CENVAT credit account but did not pay the interest.

SCN came to be issued and the adjudicating authority confirmed the demand along with interest and imposed various penalties.

The Commissioner (Appeals) dropped the demand on the ground of limitation and, therefore, the Revenue is before the CESTAT.

The Revenue representative submitted that the respondents are registered with the Central Excise department since 2001; that during the period 2006-07 and 2008-09 they collected service tax but did not pay the same to the department and also did not file any service tax returns. Thus in view of this act of suppression, the extended period of limitation is invokable and, therefore, the order of Commr(A) is required to be set aside.

The respondent submitted that there is no suppression of facts from their side as they were maintaining the Books of Accounts and all the records of collection of service tax were reflected therein and also in their balance sheet; that it is rightly recorded by the lower appellate authority that if there was any intention to suppress the facts of collection of service tax, they would have not shown the details in their Books of Accounts.

The Bench observed –

"7. In this case, it is an admitted fact that during the period 2006-07 and 2008-09, the respondents collected the service tax but did not pay the same to the department. Further, during the period they have not filed the service tax returns also. If the investigation was not conducted by the department and the statement had not been recorded on 13.12.2008, the facts of collection of service tax and not paying the same with the Government treasury would not have come into the knowledge of the department. In these circumstances, I hold that the respondents have suppressed the material facts of the collection of service tax from the customers and not paying the same with the department. Therefore, the impugned order lacks merit and the same is set aside…."

The Revenue appeal was allowed.

(See 2014-TIOL-995-CESTAT-MUM)


 RECENT DISCUSSION(S) POST YOUR COMMENTS
   
 
Sub: Application of limitation for demand under section 73A and interest under 73 B reg

The question which is relevant is as to whether limitation period mentioned in section 73 of finance act 1994 will apply to demand of tax under 73A of Finance Act 1994. I am of the view that there is no limitation of five years or 18 months under section 73A. The money collected as service tax has to be paid with interest to the government without getting into the question of suppression of facts. I am of the view that both commissioner appeals and cestat missed this point.

Posted by mayank kumar
 

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