Ease or Dis-Ease of Doing Business in India?

The very rationale of having additional six months for service tax demands than Customs and Excise, itself is flawed. Presumably this additional six months has been granted for service tax, on the ground that unlike Excise, it is half yearly return under Service Tax. But let us see how it operates.
For example, the return for the half year ending March 2015 is to be filed on or before 25.04.2015 and let us assume that a service provider has filed the return on 25.04.2015. As per section 73, of the Finance Act, 1994 the department can issue a demand notice, for cases not involving fraud, suppression, etc. within eighteen months from the “relevant date”. The relevant date, as defined in the section would be
“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”.
So the show cause notice for the half year ending March 2015 (Oct 2014 to Mar 2015) could be issued on or before 24.10.2016. It may be noted that the notice can cover the period from Oct 2014, a well two years. So, as it is half yearly return in Service Tax, the department is not losing six months of demand period, but in fact gaining six months.
Now with the enhancement of eighteen months to thirty months, the demand could cover 36 months, i.e. a cool 3 years.

Natarajan

jaikumar seetharaman 05/03/2016