Advisory on payment of tax by taxpayers under QRMP Scheme, for the month of March, 2021

The Goods and Services Tax Network (GSTN) has issued Advisory dated April 08, 2021 on payment of tax by taxpayers under Quarterly Return Monthly Payment of Taxes (QRMP) Scheme for the month of March, 2021.

All taxpayers having aggregate turnover up to Rs 5 crores, under QRMP Scheme (w.e.f. 01.01.2021 onwards), are required to furnish return on quarterly basis, along with payment of tax on monthly basis.

Persons availing QRMP Scheme are required to pay tax due, in each of the three months of the quarter, by depositing the due amount as discussed below.

Payment of Tax for first two months of a quarter (M1 & M2 ie for January and February month for Jan-March Quarter):

a. While generating the challan, taxpayers must select “Monthly payment for quarterly taxpayer” as reason for generating the challan.

b. They can choose either of the following two options to generate the Challan:

i. 35% Challan (Fixed Sum Method): For taxpayers opting for this method, portal will generate a pre-filled challan in Form GST PMT-06, for an amount equal to 35% of the tax paid in cash, in the preceding quarter, if the return was furnished quarterly or equal to the tax paid in cash in the last month of the immediately preceding quarter, if the return was furnished monthly.

ii. Challan on a self-assessment basis (Self-Assessment Method): These taxpayers can pay tax due by considering the tax liability on inward and outward supplies and the input tax credit as available, in FORM GST PMT-06.

Note: The aforesaid options are not available for payment of tax for third month (M3) of the quarter to persons availing QRMP Scheme.

c. Payment of Tax for third month of a quarter (M3 ie for March month for Jan-March Quarter): For third month of the quarter (M3), taxpayers can click button ‘Create Challan’ in Payment Table 6 of Form GSTR-3B and file GST-PMT-06 Challan, for depositing any amount towards their tax liability.

d. For more details on QRMP Scheme, please click on below links:

https://www.gst.gov.in/newsandupdates/read/417

https://www.gst.gov.in/newsandupdates/read/437

https://www.gst.gov.in/newsandupdates/read/447

This is for your information and necessary action please.

The Advisory can be accessed at: https://www.gst.gov.in/newsandupdates/read/462

CBDT released JSON utility for ITR-1 and ITR-4 for A.Y. 2021-22

*CBDT introduces new rule for making online application for lower withholding on payments to non-residents*

*CBDT introduces new rule for making online application for lower withholding on payments to non-residents*

A notification no. 18 issued by CBDT on 16 March 2021  that amends the Income Tax Rules, 1962 by inserting Rule 29BA (Rule) that deals with online application for lower withholding on payments to non-residents (NR) under the Indian Tax Laws (ITL) . The Notification also notifies final Form 15E  for making such application.

The extant procedure for making application for lower withholding on payments to NR is a physical paper-based submission process with no specific form prescribed. Pursuant to recent amendments in the ITL, which empower the CBDT to prescribe the form and manner of filing such application, the CBDT had earlier published a draft of the Form, seeking stakeholders’ comments.

The CBDT has now notified the Rule and the Form. Broadly, the Form requires furnishing of elaborate details of the payer, NR payee, transaction details and taxability under the ITL, including relief claimed under the Double Taxation Avoidance Agreement (DTAA), along with copies of transaction documents. The Rule requires the taxpayer to file such Form under digital signature or through electronic verification code. The Tax Authority shall, after examining the specific information of the NR recipient, issue lower withholding order after determining the appropriate proportion of sum chargeable to tax. Such order shall be valid only for the payment to NR named therein and for such period of the year as may be specified in the certificate or cancellation by the tax authority, whichever is earlier.

CA Amresh Vashisht

Mandatory to mention 4/6-digit HSN/SAC Code w.e.f. April 1, 2021

The Central Board of Indirect Taxes (“CBIC”) issued Notification No. 12/2017- Central Tax dated June 28, 2017, to show specified digits of Harmonised System of Nomenclature (“HSN”)/ Service Accounting Code (“SAC”) Code on raising of tax invoices for supply of goods or services as under:

S. No.	Aggregate Turnover in the preceding Financial Year	Number of Digits of HSN Code
1.	Upto INR 1.50 crore	Nil
2.	More than INR 1.50 crore and upto INR 5 crores	2
3.	More than INR 5 crores	4

Subsequently, the above notification was amended vide Notification No. 78/2020 – Central Tax, dated October 15, 2020 to mandate 4/6- digit HSN/SAC Code on supply of goods or services on the tax invoices w.e.f. April 1, 2021:

S. No.	Aggregate Turnover in the preceding Financial Year	Number of Digits of HSN Code
1.	Upto INR 5 crores	4
2.	More than INR 5 crores	6

Further, a proviso was inserted to provide that 4- digits of HSN Code is optional in respect of supplies made to unregistered persons i.e., B2C supplies for a registered person having aggregate turnover upto INR 5 crores in the previous financial year.

Thereafter, Notification No. 12/2017- Central Tax dated June 28, 2017 was again amended vide Notification No. 90/2020 – Central Tax, dated December 01, 2020 to provide for class of supply- ‘Chemicals’ whose HSN Code are required to be mentioned at 8-digit on the tax invoices.

Further, it is to be noted that the above changes of mentioning 4/6 Digit HSN/ SAC code, as applicable, are also required to be captured in Table 12 of Form GSTR-1 (i.e., details of outward supplies of goods or services) and therefore, corresponding changes are made in the same.

Furthermore, it is very important to mention the correct HSN/ SAC Code on the tax invoices and Form GSTR-1 as penalty of INR 50,000/- (INR 25,000/- each for CGST and SGST) can be levied for non-mentioning or mentioning wrong HSN/ SAC Code under Section 125 of the Central Goods and Services Tax Act, 2017 (i.e., General penalty).

However, it is to be noted that there are many disputes w.r.t. classification of the various goods and services like sanitizers, railway parts, fryums etc. Further, the disputes are also going on as to whether classification as per Notification No. 1/2017- Central Tax (Rate) dated June 28, 2017 (“Goods Rate Notification”) should be in line with explanation (iii) and (iv) of said notification vide which it is provided that “Tariff item”, “sub-heading” “heading” and “Chapter” in the Goods Rate Notification shall mean tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (“CTA”) and  that rules for the interpretation of the First Schedule to the CTA including the Section and Chapter Notes and the General Explanatory Notes would be apply to the interpretation of the  Goods Rate Notification which provides only 1,208 goods approx. as against more than 12,000 products under First Schedule of the CTA.

To know more, kindly watch video on “Compulsorily mentioning of 4/6 Digit HSN/SAC Code -Goods/Services w.e.f April 1, 2021” by CA Bimal Jain- https://www.youtube.com/watch?v=TCQOgz3CyUk

*Updation Regarding Selection Of Core Business Activity For Every Registered Person On GST Portal:*

The Goods and Service Tax Network (GSTN) has enabled the new feature to select Core Business Activity enabled on GST Portal. 

*Meaning Of Manufacturer* 

A manufacturer is a registered person produces new products from raw materials and 

components using tools, equipment’s and machines and then sells them to the consumers, wholesalers,distributors, retailers or to the other manufacturers. A manufacturer may sell 

some more brought out items or may provide some ancillary services with his manufactured 

goods, but he would continue to be classified as manufacturer because it is the Primary Business Activity. 

*Meaning Of Trader* 

A trader is a registered person who engages in the buying and selling of goods. Traders have 

been further classified as – Wholesaler or Distributor 

*Meaning Of Retailer*

Retailer includes a registered person selling goods through e-commerce operators. 

*Meaning Of Service Provider And Others*

A service provider is a registered person who provides service to a recipient of service and is  neither a manufacturer nor a trader. e.g. Banking service, IT service, works-contract service, agents, intermediaries, GTAs etc. 

*Others will include Work Contract and Other Miscellaneous Items.* 

If more than one business Activity then In case all activities are applicable to you, kindly select your core business activity then go to MY PROFILE > CORE BUSINESS ACTIVITY STATUS and 

include all the category.

Rectification of GST orders

*Rectification of GST orders*

On the lines of section 154 of Income tax Act for rectification of Mistakes apparent from record, GST law also contains provisions of rectification of any decision or order or notice or certificate. 

*RECTIFIABLE ORDERS*

As per section 161 of the act ANY

(a) Decision

(b) Order

(c) Notice

(d) Certificate or

(e) any otherdocuments

issued or passed by any authority can be rectified. Such as 

(a) Assessment order issued to registered person for non-filing of returns u/s 62.

(b) Assessment order issued to unregistered person for non-filing of returns u/s 63.

(c) Assessment order in certain special cases u/s 64

(d) Notice or assessment order issued u/s 73 or u/s 74.

(e) Notice issued to the person who collected tax but not deposited to government u/s76.

(f) Penalty order issued u/s 122, u/s 123, u/s 125, u/s 127.

(g) Order of detention or seizure on the person transporting the goods u/s 129.

(h) Order of confiscation u/s 130.

(i) Refund order u/s 54

(j) Errors in particulars registration certificate issued by department.

(k) Provisional assessment order passed u/s 60.

A rectification is done when there is an error which is apparent on the face of record in such decision or order or notice or certificate or any other document. Thus, errors which involves question of law cannot be rectified. However Mistake which can be established by a long-drawn process of reasoning on a decision on a debatable point of law is not a mistake apparent from the record - T.S. Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50 (SC).

*RECTIFIABLE AUTHORITY*

As per section 161 of the act rectification can be done by

(a) Officers (who passed original order) appointed under this Act, or (i.e., Sui moto)

(b) On application for rectification by officer appointed under the SGST Act or under UTGST Act, or

(c) On application for rectification by person who has been affected by such decision, order, notice etc.

Thus , authority who passes order / notice etc. can only rectify it.

Authority mentioned u/s 161 not defined in the act however as its only adjudicating authority who can issue/pass any order and notices under this act section 2(4) of the act defines "adjudicating authority" as any authority, appointed or authorised to pass any order or decision under this Act, but does not include the Central Board of Indirect Taxes and Customs, the Revisional Authority, the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, the Appellate Authority, the Appellate Tribunal and the Authority referred to in sub-section (2) of section 171.

As per section 102 of the act any order of AAR or AAAR may also be rectified.

*NONRECTIFIABLE ORDERS*

Orders notice etc. of following authorities cannot be rectified:

(a) Central Board of Indirect Taxes and Customs,

(b) the Revisional Authority appointed or authorised for revision of decision or orders as referred to in section 108.

(c) the Appellate Tribunal and the Authority

Further orders passed by an officer appointed  order passed by officers appointed under CGST act cannot be rectified by officers appointed under SGST Act or UTCGST Act.

*TIMELINE*

There is a time limit within which application for rectification should be made and rectification order should be passed. As per section 161 (1) of the act application for rectification shall be made with a period of three months from the date of issue/pass of such decision or order or notices or certificate or any other documents.

Rectification should be done with in six months from the date of issue of such decision or order or notice or certificate or any other document. thus, rectification order should be passed with six months of original order passed. Thus, if original order passed on January 01, 2021 than application for rectification must be made on or before March 31,2021 and rectification should be done within six months of original order i.e., June 30,2021 or before.

However as per second proviso to section 161 of the act time limit of six month will not apply in case of cases where the rectification is purely in the nature of correction of a clerical or arithmetical error, arising from any accidental slip or omission. Thus, in these cases rectification can be done anytime, and time limit of six months will not apply here.

As per rule 142 (8) of CGST Rules, 2017 Where a rectification of the order has been passed in accordance with the provisions of section 161 or where an order uploaded on the system has been withdrawn, a summary of the rectification order or of the withdrawal order shall be uploaded electronically by the proper officer in FORM GST DRC-08 It is imperative to note that there is no standardized form of application in which request can be made for rectification.

Section 161 imposes a duty upon the authority to make an order on an application for rectification within six months from the date of the receipt of the application. It, thus, enjoins a duty upon the authority; at the same time, it does not provide for consequences, in case the authority fails to perform his duty as envisaged by section 161. This provision enjoins upon the authority to act within the specified time (six months from date of receipt of application) and is directory. It cannot be construed to be a mandatory provision to defeat or frustrate the remedy available to a person on account of failure of the tax authority to perform his duty within the specified time.

As per third proviso of section 161 of the Act where such rectification adversely affects any person, the principles of natural justice shall be followed by the authority carrying out such rectification. Therefore, if rectification order passed by authority adversely affecting to the concerned person (such increase in output liability, disallowance of ITC, cancellation of registration, etc) than authority must follow principles of natural justice.

*Rectification Vis a vis-à-vis Revision by revisional Authority*

As per section 108 Revisional authority (RA) has power to revise the order or decisions passed by adjudicating authority. Its is important to note that RA revise orders passed by adjudicating authority only and only if is order passed is so far as it is prejudicial to the interest of revenue and is illegal or improper or has not considered certain material facts, whether available at the time of issuance of the said order or not or in consequence of an observation by the Comptroller and Auditor General of India. However, on the other hand rectification of an order, notices etc. can be done even when it is in favor of taxpayers.

*Rectification Vis a vis-à-vis Appeal*

Any person aggrieved by any decision or order passed by an adjudicating authority may appeal to such Appellate Authority within three months from the date said decision or order is communicated to such person. When issue is not error which is apparent on the face of record and involve question of law then remedy of rectification u/s 161 is not available and person will have to adopt appeal route to correct the impugned order. Here it also important to note that appeal can be made against order passed whereas under rectification not only order but other matters such as decision, notice, certificate issued, or any other documents issued can also be rectified.

*IMPORTANT SC ORDER*

 it is important to note that in the case of Hind Wire Industries Ltd. v. CIT [1995] 212 ITR 639/80 Taxman 79 (SC)supreme court held "'Order' includes amended rectified order also", thus application can be made for rectified order as well. Therefore, once an order is amended to give effect to original order, period of limitation under section 161 would commence from amended order and not from original order.

Ca Amresh Vashisht

*Budget proposals on goodwill:*

1. Whether goodwill is a depreciable asset or not has been a matter of litigation. Supreme Court in the case of Smiff securities has ruled that depreciation could be provided on acquired goodwill. 

2. Sec 32(1) does not explicitly say that the term asset excludes goodwill for calculating depreciation. 

3. So now in this context, Finance Act 2021 has put to rest this controversy by introducing provisions making goodwill a non depreciable asset. 

4. Following amendments have been proposed:

a. Sec 2(11) defining block of assets has now excluded goodwill from the same. 

b. Sec 32(1)(ii) now provides that goodwill is not an asset for providing depreciation. 

c. Sec 50 provides that where goodwill is already a part of block of assets, WDV and capital gains shall be determined as prescribed. 

d. Sec 55 now provides that in case goodwill has been purchased from a previous owner, the cost of acquisition shall be the purchase price less depreciation already provided, if any

Best judgment’ assessment awaits GST return non-filers

NEW DELHI: Thousands of GST non-filers, or those who did not file returns, have received an auto-generated letter from the authorities, asking them to file their returns or face the prospect of the tax department assessing their liability and asking them to pay. Although the GST law provided for use of “best judgment” assessment, it’s a provision that is only being used now to coax those who have not filed their returns, and paid up GST, to clear dues to the government. Sources said GST authorities have stepped up their drive to maximise collections weeks ahead of close of the financial year. This has been a particularly difficult year for the tax department as lockdown resulted in a massive drop in collections and forced officials to go slow on acting against non-filers and wrong doers. Since October, authorities have swung back into action, launching an offensive against those issuing or dealing in fake invoices and prodding others to file returns, resulting in a record 90 lakh filings in January, when collections also touched an all-time high of nearly Rs 1.2 lakh crore.

A tax consultant with a global firm said that GST Network has developed several tools to enable the tax department to chase those who are non-compliant. “When non-filers do not file GST returns within 15 days of notice for filing returns, the assessing authority on 16th day is empowered under section 62 of CGST Act to pass best judgment assessment order, assessing the tax liability on the basis of available material. This assessment order is deemed withdrawn if tax is paid and a return is filed within 30 days, failing which recovery proceedings can be initiated by authorities unless the order is challenged in appeal after payment of 100% of admitted tax and 10% of the disputed amount, which is the precondition,” tax lawyer R S Sharma explained. Already, tools have been deployed to detect and act against tax filers with a divergence in sales reported in the initial and final returns. Besides, the department has also released the standard operating procedure (SOP) for the immediate suspension of registration of a person, as a measure to safeguard interest of revenue department in case discrepancies or anomalies are observed, indicating a violation of the law and the rules.

No ITC on Demo vehicles purchased even though in the course of business

The Hon’ble AAR Madhya Pradesh in M/s. Khatwani Sales and Services LLP [Order No. 13/2020 dated July 23, 2020] held that since the demo vehicles do not comply to any of the conditions prescribed in Clause (A), (B) and (C) of Section 17(5)(a) of the Central Goods and Service Tax Act, 2017 (“CGST Act”), therefore no Input Tax Credit (“ITC”) can be claimed on the demo vehicles purchased by the authorized dealer of KIA. Facts:- M/s. Khatwani Sales and Services LLP (“Applicant”) are authorized dealer of KIA for sales and services of vehicles. The Applicant purchases the vehicles from the supplier against tax invoices after paying tax and capitalizes the demo vehicles in the books of accounts. Applicants contentions:- The demo vehicles are used for imparting training about the features of the car andtraining on driving such vehicles to the prospective buyer and same would be used for test drive of the similar vehicle model which will generate taxable revenue and helps in furtherance of business raising sales of the vehicles. That ITC should be allowed as it satisfies the criteria mentioned in Clause A of Section 17(5)(a) of the CGST Act, as demo vehicles are used for furtherance of business by increasing the salesof similar vehicles and of Clause C of Section 17(5)(a) ibid as demo vehicles are used for imparting training about the features of the car, training on driving such vehicles to the prospective buyer and used for test drive after which sales can be generated easily. The Applicant cited the following advance rulings which endorses the view that ITC is allowed on capital goods being demo cars: M/s. A.M. Motors (AAR Kerala) [Order No. KER/10/28 dated September 26, 2018] M/s. Chowgule Industries Private Limited (AAR Goa) [Order No. GOA/GAAR/07 of 2018-19/4796 dated March 29, 2019] M/s. Chowgule Industries Private Limited (AAR Maharashtra) [Advance Ruling No. GST-ARA-18/2019-20/B-121 decided on December 26, 2019] That the vehicles used for demo purpose are sold in subsequent year at Written Down Value (WDV). It was also submitted that they will abide with the provisions of Section 18(6) of CGST Act at the time of sale of the demo v It was declared that they will not claim depreciation on tax component of the capitalized demo vehicles. Issue:- Whether ITC is available to the Applicant on purchase of demo vehicles? Held:- The Hon’ble AAR Madhya Pradesh in Case No. 02/2020 Order No. 13/2020 order dated July 23, 2020 has held that: As per Section 17(5)(a) of the CGST Act, ITC shall be available in respect of motor vehicles which are further supplied as such, used for transportation of passengers or which are used for imparting training of driving of such vehicles. It cannot be said that the demo vehicles is for further supply by subsequent sale of demo vehicle after one or two years. The sale of demo vehicle in the subsequent year on which depreciation has been charged is to be treated as a sale of used second-hand vehicle andnot sale of a new vehicle. Found that, demo vehicles used for demo andtrial to the customers are not covered in the exception of Section 17(5)(a) of the CGST Act: Clause (A) i.e. for further supply of such vehicle as such. Clause (B) i.e. for transportation of passengers. Clause (C) i.e. for imparting training on driving of such vehicles. Hence, though the Demo vehicles are for furtherance of business of the Applicant but they are not eligible for ITC in view of provisions of Section 17(5)(a) of CGST Act. Further, the eligibility of ITC on demo vehicles cannot be decided on the basis of their capitalization or payment of GST at the time of their sale in the subsequent year. Held that, there is clear provision in law for admissibility of ITC on motor vehicles in any of the three conditions prescribed in Clause (A), (B) and(C) of Section 17(5)(a) of the CGST Act. Since the Applicant does not qualifies any of the above conditions hence, he is not eligible for ITC on demo vehicles in view of provisions of Section 17(5)(a) ibid. Our comments:- It is to be noted that in the cases M/s. Chowgule Industries Private Limited (AAR Maharashtra) (supra) wherein it was ruled that since the demo vehicles were being used for a specified period and then sold at after paying the applicable taxes on sale value at that point of time. Therefore, it amounted as for making further supply and no time limit prescribed in the CGST Act for making such further supplies. Thus, the applicant is eligible to avail ITC. Similar stand was taken in M/s. Chowgule Industries Private Limited (AAR Goa) and M/s. A.M. Motors (AAR Kerala) (supra) to hold that the capital goods which are used in the course or furtherance of business, is entitled for ITC and as the purchase of demo car is in the furtherance of business, the applicant is eligible for ITC. Furthermore, this activity does not come under Section 17(5) of the CGST Act, as after a limited period of use as demo car, the vehicles are sold at the written down book value. Thus, the above rulings have allowed ITC stating that selling of demo cars amounts to further supply as enumerated under clause (A) of Section 17(5)(a) of the CGST Act. Hence, we are of the view that demo vehicles or goods certainly used in the course or furtherance of business and credit is eligible to the suppliers of goods but, such divergent rulings are only creating hurdles in making GST law as Good and Simple Tax. Relevant Provisions:- Section 17(5)(a) of the CGST Act: “(5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following, namely:- (a) motor vehicles for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver), except when they are used for making the following taxable supplies, namely:- (A) further supply of such motor vehicles; or (B) transportation of passengers; or (C) imparting training on driving such motor vehicles;”

Shock Causing Notices (SCNs) of Service tax by GST department

Arjun (Fictional Character): Krishna, many taxpayers have been receiving Show Cause Notices of service tax from the GST departments across India. Why are such notices being issued?

Krishna (Fictional Character): Arjuna, in these crucial times of Coronavirus Pandemic, when complying with the Tax deadlines is a hard nut to crack, the Central GST department has been issuing Show Cause Notices (SCN’s) for differences in receipts as per Service tax returns & Income tax returns for different FY’s- 14-15, 15-16 and so on. It seems Crores of rupees tax notices have been issued to taxpayers without proper evaluation, and even fulfilling the required law mandates. This is a critical topic to discuss.

Arjun (Fictional Character): Krishna, on what ground such notices are being issued?

Krishna (Fictional Character): Arjuna, many notices are being issued on the grounds that receipts as per Income Tax Return or taxable value as per VAT return is different as compared to receipts shown in the service tax return, on which straight away a percentage of service tax is applied. Such an amount of tax is shown payable in the notices, where such taxpayers are not even liable to pay service tax. Many professionals such as doctors have also received service tax notices, who were not at all liable to levy service tax. It can clearly be stated that no due diligence is followed while issuing many notices, and baseless grounds are used for such a purpose.

Arjun (Fictional Character): Krishna, what are the difficulties faced by the taxpayers due to these notices?

Krishna (Fictional Character): Arjuna, many notices have called upon for much older information & documents that they are not entitled to call for. Enquiry up to 5 years can be called upon only if service tax has not been paid due to fraud, collusion, willful statement, or suppression of facts. In a few cases, taxpayers are being troubled by sending notices again, whose replies have already been sent by them to the departments. Principles of natural justice, a reasonable opportunity of being heard, etc are not followed in many cases.

Arjun (Fictional Character): Krishna, what is the remedy available with the taxpayer in such a situation?

Krishna (Fictional Character): Arjuna, after receipt of the notice, the assessee can file his reply on why the extended period under section 73(1) should not be invoked, service tax recovery, interest recovery, penalty u/s 77, 78, and late fees u/s 70 not to be levied within 30 days. He will be given the opportunity for a personal hearing. After considering the representation of the person on whom notices are served, the adjudicating authority will determine the tax payable by issuing a reasoned order. This procedure is a farce. Once show cause notice is issued, demand is as good as confirmed.

 

An order will be issued after adjudication, in which demand may be dropped or confirmed, as the case may be. Penalty & Interest may be levied. Accordingly, tax, interest & penalties need to be paid within the given time frame. The last remedy available to the taxpayer is to go for an appeal. In a few major cases where notice is prima facie against law & strongly in favour of the taxpayer, filing a writ petition can be another option.

Arjun (Fictional Character): Krishna, what are the important points & judgments to be kept in mind while dealing with the SCN’s?

Krishna (Fictional Character): Arjuna, the followings are important points to be kept in mind :

1. If notice is not issued under section 73, the demand of service tax and interest is not sustainable. [Diamonds cable v/s CCE (2005) 1 STT 91 (CESAT)]

2. Drafting mistake in amendment section 73(2A)- The amendments refer to the appellate authority, tribunal, or court, who may conclude that there was no fraud, suppression, etc. However, what happens if the adjudicating authority itself comes to the conclusion that there was no fraud, suppression, etc.? (It is assumed that adjudication, in any case, is a farce, the adjudicating authority is, in any case, going to confirm demand for all five years.)

3. If the assessee has a bona fide belief, demand beyond 30 months is not sustainable. (earlier 1 year) [Secretary, Townhall committee, Mysore city Corpn. v/s CCE (2007) 10 STT 434 (CESTAT) ; Singh Brothers v/s CCE (2009) 20 STT 357 (CESTAT) ; Toyota Kirloskar Motors v/s CCE (2009) 21 STT 378 (CESTAT) ; Padam Chand Mutha v/s CCE (2009) 21 STT 422 ; Asian cranes (2009) v/s CCE 22 STT 510]

4. If there was bona fide doubt about chargeability of service tax, the extended period of limitation is not available. If there is no mala fide intention, beyond 18 months is not sustainable.

 

[Indian Institute of Chemical Technology v/s CCE (2009) 23 STT 61 (CESTAT)

5. If the department was itself raising demands under various categories for the same activity, departmental authorities themselves made the assessee land in total chaos and confusion. Hence they are not entitled to allege that assessee did anything or omitted to do anything with an intent to evade tax. Hence, the extended period of limitation cannot be invoked and demand beyond 30 months is to be set aside. [ Nexcus computers v/c CCE (2009) 22 STT 10 (CESTAT) ]

6. If the department itself was in doubt about the taxability of service, demand for an extended period is not sustainable. CST v/s Gujrat State Seeds Certification Agency (2013) 64 VST 433 (Guj HC DB)

7. If there is no suppression of facts, demand beyond 30 months is not sustainable. [MP Water & Power management institute v/s CCE (2009) 20 STT 79 (CESTAT) ; Sapphire Security v/s CCE (2010) 24 STT 277 (CESTAT) ; Vishal Traders v/s CCE (2010) 32 STT 75

8. Extended period is not invocable when earlier Tribunal decisions were in favour of the assessee, even if later the decision was overruled by a large bench. [ Nice color labs v/s CCE (2013) 31 STT 407 (CESTAT) ]

9. There can be no suppression if the assessee was ignorant – In Tamil Nadu Housing Board v/s CCE 1995 Supp(1) SCC 50 = 1994, it was observed, "intention to evade payment of duty is not mere failure to pay duty" it must be something more. "Evade" means defeating the provisions of law paying duty. It is made more stringent by the use of the word – "intent". In other words, the assessee must deliberately avoid payment of duty payable under the law.

Arjun (Fictional Character): Krishna, what should the taxpayer learn from this?

Krishna (Fictional Character): Arjuna, it is totally unjust action taken by the tax departments against few taxpayers. Many show cause notices are mere illegal and putting the taxpayers in a dilemma by using words such as suppression, intend to evade tax, failed to pay, failed to assess, etc. Still, notices have been sent in bulk, without the satisfaction of purpose. Taxpayers & tax organizations have raised this concern with the Finance Minister in this regard. Let’s hope that genuine taxpayers will not be harassed. It is a "Shock Causing Notice" instead of a "Show Cause Notice" for many taxpayers