Indirect Taxes

Service Tax - Statute Update

Rajkamal Shah
CA.

Conclusion of adjudication proceedings

The Finance Ministry has clarified that when a tax-payer pay service tax liability with interest and penalty equal to 25% of service tax amount within a period of one month from the date of issue of SCN as provided u/s. 73(1A) of the Finance Act, 1994, all the proceedings shall be deemed to be concluded

Under Section 73 (1A) tax-payer is given immunity from penal proceedings incase of service tax not having been levied or paid or short paid or short levied or erroneously refunded by reason of fraud, collusion or any wilful misstatement or suppression of facts or contravention of any provision with intent to evade payment of service tax, if he pays up service tax determined by issue of notice, alongwith interest and 25% of service tax amount within 30 days of receipt of such notice.

The Finance Ministry has now clarified that upon payment as stated above, all the proceedings including penalty u/s.76, 77 & 78 under the Act shall be deemed to have been concluded and not only the proceedings
u/s.73 of the Act.

Section 73(3) provide that a tax-payer may sue-moto make payment of service tax not levied or not paid or short levied or short paid or erroneously refunded, either on his own ascertainment or on the basis of ascertainment by a CEO and inform the CEO of such payment in writing,. In such a case no SCN will be issued. It has been further clarified that in such cases also all the proceedings under the Act shall be deemed to have been concluded.

(Letter F. No. 137/167/2006-CX.4 dated 3-10-2007)

Issue of Registration Certificate

The Government has issued a stern warning to the officers causing delay in issuing Registration Certificates. It has been clarified that the form for application for registration, i.e. form ST-1 is a self contained form and no more information should be required from the applicants. It has been specifically stated that requirement of documents like copies of income tax returns, copies of contracts, balance sheet etc. are not required to be submitted. If any verification needs to be conducted to check the bonafides of the tax-payers, the same can be done on ex-post-facto basis, without delaying the process of grant of registration.

It has been stated that in no case grant of registration should be delayed beyond the prescribed that and that appropriate action should be taken against the officers causing such delays.

(Dy. No. 294/ Com (ST)/2007 dated 3-9-2007)