Representation to FM regarding Service Tax Department issuing illegal SCN for FY 2014-15

CHARTERED ACCOUNTANTS ASSOCIATION

January 04, 2020

To,
Honorable Minister for Finance
Govt. of India
New Delhi.

Respected Madam,

Sub:- Misuse of Official Position by making roving enquiries & issuing illegal Show Cause Notices by Central Excise (Service Tax) Department .

We would like to bring to your kind notice that The Chartered Accountants Association is representing Chartered Accountants and is a constituent body under the societies act. The functions of the Association include holding of talks, workshops, seminars and conferences on topics of professional interest with a view to help the members keep themselves abreast of the developments in the fast changing scenario, to represent members before various authorities etc.

You will appreciate the fact that in these times of COVID-19 pandemic, the Government is taking all measure to make life easy for all citizens by relaxing the compliance burden and also by giving other incentives. However these efforts are being negated by high headed and irresponsible working by some officers of the Central GST (Service Tax) Department in defiance of the fulfillment of four comers of law.

Central GST Departrnent has been issuing Show Cause Notices (SCNs) for FY 14-15 for difference in Receipts as per Service Tax Return and Income Tax Return in bulk without going into the legality and without fulfilling the mandate given by the law for issue of such Show Cause Notices. Notices have been issued even to professionals like Doctors (Corona Warriors) who were not even liable to service tax levy.

Notices have been issued solely on the ground that receipts shown as per ITR are different as compared to receipts shown in service tax retum. Further in case of persons, who were not liable to service tax, notices have been issued to make roving enquires on basis of their ITR. Notices are asking for plethora of information for 3-5 years. Assesses are being harassed by such vague notices making roving enquiries.

The notices have been issued on basis of discrepancies in Income Tax and Service tax data even in cases where Departmental audit has already been done. It is clear that notices have been issued blankety and without any due diligence leading to creation of unnecessary hardship for assesses. An attempt is being made by departmental officers to create disputes and demands for the reasons best known to them.

The Show Cause Notices (SCNs) have been issued with a predetermined state of mind and in a prejudiced manner and have been issued with arbitrariness and vagueness. It is pertinent to mention here that the SCNs have been issued in an illegal manner as extended period of limitation cannot be invoked in the cases where no facts have been suppressed from the department with an intention to evade the payment of service tax. Accordingly, the entire period covered under the issued SCNs from April, 2014 to March, 2015 is barred by limitation.

Difference in receipts as per ITR and Service Tax or non application of Service tax number does tantamount to any fraud leading to notices asking for 5 years old information. Enquiry up to 5 year can be made only if service tax has not been paid due to fraud, collusion, willful statement or suppression of facts. If receipts as per ITR are not tallying, it does not mean there is fraud, collusion, willful statement or suppression of facts. There can be a number of reasons for the mismatch like cash or mercantile basis of the system, professionals, Other Persons not liable to service tax and so on.

Offcers cannot make roving enquiries and issue notices beyond the limitation period of 1 year. However notices have been issued in bulk in defiance of law. Without recording any reason which indicates any fraud or misstatement, notices are being issued to one and all. Extended period of 5 years can be availed by Service Tax Offcer only if he is satisfied that there if fraud or willful statement. However blanket notices have been issued to all without any satisfaction.

The officers dealing with notices are harassing the Assessee’s and asking for documents which they are not entitled to call for.

The SCNs issued mention various enquiry letters, which were never received by any assesses and have been wrongly mentioned in the SCNs, which also shows the arbitrary working of the department.

The extension in time limit till 31/12/2020 was provided for completion of pending proceedings or filing of appeals etc and not to make roving enquiries and harass the assessees. Sending notices, calling for information more than 5 year old, is uncalled for. In many cases even when replies have been sent by mail or post, again notices are being sent and a situation is being created that assessee has to contact the relevant offcer personally or through an authorized representative making mockery of the claims of the government for faceless resolution of issues.

In view of above submissions, the SCNs issued without force of law may kindly be filed without asking the Assesses to comply with the same as it would tantamount to their harassment and outflow of funds for compliance in this COVID period. It is also requested that a proper enquiry may also be made with regard to issue of these illegal show cause notices.

Thanking you

Yours faithfully

(CA. Ashwani Kumar Jindal)
General Secretary