Anonymous
in Tax and Accounting Law
Asked July 19, 2017

Challenging service tax

  • 1 Answer
  • 356 Views

Our firm is a registered partnership firm under Service Tax as Civil Contractor providing Work contract Services for construction of residential complexes to Greater Noida Authority and Housing Board Haryana. The work contracts in Greater Noida consisted of construction of Row Houses and in Housing Board consisted of construction of EWS Flats. A show cause Notice was issued to our firm w.r.t. above said works in Feb 2015 asking for a demand of over Rs 4.8 Cr. i.e around 2.40Cr for G NOIDA and 2.40 Cr for HBH. Out of 4.8 Cr, an amount of 1.60Cr against demand for G NOIDA was already deposited to the dept which was received separately from G NOIDA Authority before 2012. After 2012 no separate payment was received from G NOIDA authority as such no further amount was paid to the department. No payment was made to the department w.r.t Haryana works for construction of EWS Flats as no separate payment was received from HBH and also the same works does not fall under the preview of Service Tax. High Court Punjab & Haryana has also passed a judgment in Aug 2016 that No service tax can be levied for construction of BPL Houses & also HBH is not entitled to pass on the burden of service tax payable on its part, if the tax is leviable, upon the contractors (CWP No. 12304 of 2015). A reply was filed to challenge the SCN in July 2015. In June,17 the Commissioner of Service Tax has confirmed a demand of 2 Cr for HBH projects and dropped the demand for service tax against the GNoida projects. The same order needs to be challenged within 90 days in front of Appellant Authority Allahabad alongwith an amount of 7.5% of the confirmed demand. Further, Housing Board Haryana have deducted a sum of Rs 55 Lac as a payment for service Tax from the final bills prepared by them for various works in year 2016. Same amount has not been taken on record by the Commissioner in the order as the department was not aware of the same. Hence an amount of 2.15 Cr ( 1.60 Cr for GNOIDA + 0.55 Cr for HBH ) already lies deposited with Service tax department which is more than the demand raised by the dept against Haryana Works. I need advice on the following issues: 1.) Does an amount of 7.5% still needs to be deposited along with challenging the order in front of Appellant authority as a sum more than the demand already lies deposited with the department? 2.) If, Yes. What measures can be taken to avoid paying the 7.5% deposit as our firm is no longer operational and have done no work since year 2014. ( like filing of writ in any court of Law, Asking for refund from Service tax dept, asking for refund from HBH as service tax cant be deducted from our Payments etc) 3.) Any professional who can handle our case in Allahabad Tribunal and who has experience handling the Service Tax demand cases along with fee details?

Answer 1

 

 

 

Dear Sir/madam,

Amount deposited prior to the date of filing appeal is considered as amount towards the fulfilment of stipulation under Section 35F[1] of the Central Excise Act, 1944 of Section 129E[2] of Customs Act, 1962. In case, the amount falls short as per the mandate of above  mentioned provisions, it needs to be paid before filing the appeal before the Appellate Authority. If the payment is not as per the mandate then the appeal is liable to be dismissed.

The deposit made at the time of filing the appeal cannot be considered as the payment of duty. So, the refund of the amount deposited earlier.

After the judgement in your favour, the amount gets refunded to you alongwith the money pending with the authorities. As per the mandate of Section 35F and 35FF of the Central Excise Act, 1944 – one cannot avoid paying 7.5% or 10% deposit.

 

[1] Where in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of central excise authori­ties or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal, deposit with the adjudicating authority the duty demanded or the penalty levied: Provided that where in any particular case, the [Commissioner (Appeals)] or the Appellate Tribunal is of opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the  [Commissioner (Appeals)] or, as the case may be, the Appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue:  [Provided further that where an application is filed before the Commissioner (Appeals) for dispensing with the deposit of duty demanded or penalty levied under the first proviso, the Commissioner (Appeals) shall, where it is possible to do so, decide such application within thirty days from the date of its filling.]

 

[2] Where in any appeal under this Chapter, the decision or order appealed against relates to any [duty and interest] demanded in respect of goods which are not under the control of the customs authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal deposit with the proper officer [duty and interest] demanded or penalty levied: Provided that where in any particular case, the  [Commissioner (Appeals)] or the Appellate Tribunal is of the opinion that the deposit of  [duty and interest] demanded or penalty levied would cause undue hardship to such person, the [Commissioner (Appeals)] or, as the case may be, the Appellate Tribunal may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue:  [Provided further that where an application is filed before the Commissioner (Appeals) for dispensing with the deposit of duty and interest demanded or penalty levied under the first proviso, the Commissioner (Appeals) shall, where it is possible to do so, decide such application within thirty days from the date of its filing.]

Agree Comment 0 Agrees about 4 years ago

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