Service tax proceedings

This query is : Resolved 

08 July 2014

Respected Experts,
Kindly give your advice :
I am a business man and engaged in my business of work contract since 1996, and use to provide service of work contract in Eastern Coalfields Limited and other Private Institutions, I use to quote Tender for the work order,and my turnover in the F.Y.2012-2013 was 35 Lakhs, without charging any service tax & 2013-2014 was 95 Lakhs, without charging service tax in Invoice, against which the Employer use to deduct 2% TDS for Income Tax and after deduction they pay me by cheque. Before getting registration in Service Tax, I have not raised any Service Tax from the Eastern Coalfields Limited,in non of my bill. After that on 01/04/2014 I have registered myself under Service Tax and got the Certificate from the Superintendent. Thereafter, on 02/05/2014 a notice of enquiry has been served by the Range Superintendent of Service Tax, to me, requiring to furnish the last 5 years Balance Sheet, Profit & Loss A/c, Bank Statement, TDS certificate, Work Order, etc. In this case I meet my consultant to sort out the problem, then he approached to the Superintendent with all relevant documents, the Superintendent told him that, I have violated the general rule of Service Tax and have registered too late. Hence, I have to pay the due service tax because I have crossed the threshold limit in F.Y. 2012-2013, have to pay the Service Tax which will be about 12.36% of 35 Lakh.
Under such circumstances please provide me reasonable answer that what is the solution for this, my pleader contended that the I have not collected service tax from the employer then how can I pay such huge amount.
Is there any Judgement or reference in this regard.
Thank You to all experts.
Please reply.

ajay sethiOnline (Expert)
09 July 2014

consult your service tax consultant . you can also raise query in CA

Anirudh (Expert)
09 July 2014

Dear Mr. Neeraj,

Since you are engaged in execution of works contract, you are liable to pay 'service tax'.

Those who provide the taxable services have to get themselves registered within a period of 30 days from the date of commencement of such service.

"Works contract service" has been introduced with effect from 1.6.2007. Prior to that the same was covered under "commercial or industrial construction" or "construction of complex" services which were introduced w.e.f. 16.6.2005 and 19.9.2004 respectively.

Therefore you ought to have taken registration and paid the applicable service tax.

1. For non-registration a penalty of Rs. 10000/- is leviable under section 77.

2. Interest for delayed payment of service tax will be levied under section 75.

3. Penalty is also leviable under Sec. 76.

Whether you charged service tax to the Eastern Coal Fields Ltd., or not is immaterial. At best you can say that whatever that you charged to Eastern Coal Fields is cum-service-tax (i.e. the amount charged by you itself includes the Service Tax also. This will mean that your profit will come down.) and pay the service tax accordingly.

In the alternative, you can talk to the Eastern Coal Fields Ltd., people and tell them that you want to charge the service tax now (supplementary bill) and request them to pay the same. If they agree, then it will not affect your profit.

However, you have to pay penalty of Rs. 10000 for non-registration, the interest on delayed payment under Sec. 75 and penalty for failure to pay service tax u/s. 76.

You have to necessarily consult a Service Tax consultant / C.A. in your area immediately.

T. Kalaiselvan, Advocate Online (Expert)
09 July 2014

You may follow the advises and suggestions made by expert Mr. Anirudh by consulting a tax consultant for further opinions on the subject.

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