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Corporate News *  Service tax penalty can’t survive when assessee acted on dept.’s own view of non-taxability: Delhi High Court. *  GST section 74 extended limitation questionable when form 26AS mismatch was already known: Karnataka High Court grants interim relief. *  CGST demand prima facie impermissible after state GST settlement under section 128A: Bombay High Court. *  Supreme Court asks GSTAT to sympathetically consider delay as taxpayers pursued remedy before wrong forum. *  Supreme Court stays Tripura High Court ruling protecting genuine buyers from ITC denial over supplier’s GST default. *  Diary entries alone can’t prove clandestine removal of goods: CESTAT quashes excise penalty on steel trader. *  Customs could investigate preferential tariff claims even before sec. 28DA: Delhi High Court. *  Customs dept. relied on fake AI generated case laws: supreme court quashes Rs. 425.28 crore penalty. *  No GST exemption in affiliation and annual registration charges for admission or conduct Of examinations: GSTAT. *  Mere invoices, cheque payments insufficient to establish genuine movement of goods: GSTAT restores Rs. 43.44 lakh ITC demand. *  Consolidated GST show cause notice covering multiple financial years is not without jurisdiction: Delhi High Court. *  Construction of independent houses on separate plots not taxable as ‘Residential Complex’ without common facilities: CESTAT. *  GST penalty exceeding statutory maximum unsustainable; Allahabad High Court quashes ? 50,000/- penalty after taxpayer filed return and paid late fee. *  GST order against standard chartered bank passed without hearing set aside by Bombay High Court. *  Retracted statements can’t be relied upon without cross-examination: CESTAT quashes gold confiscation. *  Burden to prove misclassification lies on customs department: CESTAT. *  CESTAT quashes Rs. 98 lakh excise demand on clearance of used refractory brick scrap. *  Service tax demand on irrigation works quashed: Karnataka High Court rules sale of goods component not taxable as service. *  GSTAT restores tax and penalty for transporting iron scrap without E-way bill citing intent to evade tax. *  Madras High Court stays GST recovery from directors without opportunity to show cause under section 89. *  Madras high court stays GST recovery notice against directors; finds prima facie case on applicability of section 79(1)(c). *  Procedural lapses can’t justify harsh punishment without serious customs breach: CESTAT quashes customs broker licence revocation. *  Service tax payable on land leasing and sports complex charges: CESTAT. *  Settled customs dispute can’t be reopened through Article 226 challenge to interest liability: Delhi High Court. *  Mere facilitation of customs clearance can’t establish knowledge of smuggling: Madras High Court. *  GST registration cancellation stayed: Allahabad High Court questions 99% ITC utilisation cap under rule 86B. *  Composition scheme lapses automatically on crossing Rs. 1.5 crore turnover: GSTAT. *  Gujarat High Court quashes GST cancellation orders after officer relied on non-existent AI-generated case laws. *  Importers liable for customs duty benefits availed through manipulated scrips: Delhi High Court. *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT.
Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

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PJ/Case Law/2014-15/2168

If the assessee pays service tax along with interest before issuance of Show cause notice, will it still amount to fraud, collusion and/or active concealment?

Case:- M/s PREMACHAND RACHUMAL Vs CCE, NAGPUR
 
Citation:- 2014-TIOL-645-CESTAT-MUM

Brief facts:- The appellant M/s Premachand Rachumal were a partnership firm engaged in the activity of civil construction, mainly roads construction and had also undertaken the construction of 14 number of tenements of Maharashtra Housing Development Authority (MHADA). A show-cause notice was issued to the appellant in respect of the 14 tenements constructed for MHADA during the period 01.06.2005 to 30.09.2007, for low income group, the activity liable to Service Tax under the category "construction of residential complexes /finishing activity".
 
Appellant’s contentions:- According to the appellant, as per the definition under Section 65 of the Finance Act, 1994, the activity of construction of residential unit was liable to tax only in case of construction of a building or buildings, having more than 12 residential units and further having common area and along with facilities like park, lift, parking space, community hall, common water supply or affluent system etc. But whereas work done by the appellant, tenements had been constructed which were small separate house and did not fall under the definition of building or buildings. Further there was no single residential complex having more than 12 residential units. However in view of the fact that the appellant admitted tax liability and deposited the tax along with interest before the issue of show-cause notice, as it was evident from para 7 of the show-cause notice, no show-cause notice was required to be issued in the matter under Section 73 (3) of the Finance At, which provided that where any Service Tax found to be not levied or short-levied, the assessee may pay the amount of Service Tax chargeable, 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 authority of such payment in writing, who on receipt of such information shall not serve any notice in respect of the amount so paid. From the show-cause notice itself it was evident that the appellant had paid the tax and informed the Revenue authorities regarding the same. Further, the appellant relied on the decision of Hon'ble Karnataka High Court in the case of Commissioner of Central Excise & Service Tax Vs. M/s Adecco Flexione Workforce solutions Ltd. = 2011-TIOL-635-HC-KA R-ST, wherein the Hon'ble Karnataka High Court had held that where tax and interest had been deposited and proper intimation given under the provisions of Section 73(3), the Revenue authority had no jurisdiction to initiate any recovery proceedings or imposition penalty under the Act.
 
Respondent’s contentions:- The learned A.R. relied upon the orders of lower appellate authority and pointed out from para 8 of the impugned order passed by the Commissioner (Appeals), wherein the plea taken by the appellant under Section 73(3) was rejected stating that the provisions were not applicable where the tax had not been levied or paid by reasons of fraud, suppression, collusion etc.
 
Reasons of judgment:- Having considered the rival contentions, Hon’ble Judge found that there was no case made out of fraud, collusion and/or active concealment on the part of the appellant. Further, the appellant had paid the Service Tax along with interest before the issue of show-cause notice and accordingly they were entitled to benefit under Section 73 (3). Thus the penalty levied under Sections 76, 77 and 78 of the Finance Act were hereby set aside. Thus, the appeal stands allowed.
 
Decision:- Appeal was allowed.
 
Comment:-The analogy drawn from the case is that Revenue could not initiate any recovery proceedings or impose penalty under the Act, where tax and interest had been deposited along with interest before the issue of show-cause notice and proper intimation given under the provisions of Section 73(3) and no case could be made out of fraud, collusion and/or active concealment on the part of the assessee in such situation.

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