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Service tax evasion complaint

498akadushman (Software Engineer) (92 Points)

27 September 2012

I used services of a Movers and packers company. He charged more than Rs 5000 ( @ 10.30%) as service tax about 1 year back.

Through RTI, I have got the information that he has not filed service tax return since registration. He has also not paid any service tax to authorities.

His bill did not have service tax number or pan. Service tax was also not mentioned separately. Serial number on the bill was around 300.

He also has many branches around country, but I suspect all of them are not registered separately.

Can I file service tax evasion complaint? What other points should I include in complaint? How much penalty can be imposed on him?

What are the grounds on which service tax department can cancel a service tax registration?

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7 Replies

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3469 Points)
Replied 27 September 2012

Very good question. The contents of your question highlights some important, practical issues. I would request experienced members of this forum to share their thoughts.

But why did you pay the service tax element when there was not ST No. or PAN written on the bill.

Regards,

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Vikas (CA) (1135 Points)
Replied 27 September 2012

Yes, I agree with you Dipjyoti...

Further, its a great effort taken by your company is finding out that the company has evaded service tax payment and collected even without service tax registration no.

You may find the details at

https://govt.net.in/mumbaicentralexcisecbec.php

498akadushman (Software Engineer) (92 Points)
Replied 28 September 2012

Thanks for replies.

Can you please guide how and what actions can be taken against such service tax evaders?

Vikas (CA) (1135 Points)
Replied 28 September 2012

Dear friend,

I am extremely sorry for the incorrect link given by me; the revised link is as follows:

https://www.mumbaicentralexcisecbec.gov.in/reportevasion.htm

Further, I would like to know whether he had specifically mentioned in the invoice that he is collecting service tax only. It is not clear from the information given by you. If he has not collected service tax separately that he may not be considered to be an assessee-in-default.

Moreover, if he is collecting service tax without service tax no. and not paying thesame to the Central Govt., then a penalty of 100% can be demanded along with interest under Sec.78.

The penal provisions of Sec.89 of the Finance Act, 2012 is as follows:

"(d) collects any amount as service tax but fails to pay the amount so collected to the credit of the Central Government beyond a period of six months

from the date on which such payment becomes due,

shall be punishable,—

(i) in the case of an offence where the amount exceeds fifty lakh rupees, with imprisonment for a term which may extend to three years:

Provided that in the absence of special and adequate reasons to the contrary to be recorded in the judgment of the court, such imprisonment shall not

be for a term of less than six months;

(ii) in any other case, with imprisonment for a term, which may extend to one year."

498akadushman (Software Engineer) (92 Points)
Replied 28 September 2012

Thanks you sir.

He did not mention the service tax separately in final bill. But in the quotation(properly signed) he gave me complete breakup of everything i.e. service tax, service charges and insurance.

His firm has been registered, so he can not contend that he is not assessee.

Does he need to file nill service tax return even if service tax collected is zero for a financial year.

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Vikas (CA) (1135 Points)
Replied 29 September 2012

If he is providing taxable services liable to service tax, then the service tax liabiltiy is required to be discharged by him and the same shall be collected and paid to the Central Govt.

Hence, please be sure that the service tax liability is collected by him; you may write to the department in such respect disclosing the whole fact in detail alond with a copy of such documents available with you and ask them to take the requisite decision. Tell them clearly that you are not aware of the actual collection made by him and the invoice issued by him also does not have any information of the service tax collected but the order was depicting the service tax collected by him. You also make the reference of the RTI filed by you.

Advice: Be clear of what you are doing and make the same clear to the department.

kunj (Trainee) (21 Points)
Replied 18 October 2012

There is a practice in market that the service tax is collected from the consumers but it is not actually deposited to the treasury of government. I am also one of the member who is against the practice of evasion of tax.

We can take an example of CA coaching Institutes in Delhi. These coaching centres never provide Service Tax invoice to student but just a receipt which is even taken back by them on issue of Entry Card. I have recently faced an issue where i demanded for tax invoice to one of the institute but they completely denied to give me and i had no options but to take the service(class) due to some reasons. Now, I realise how helpless we are as the tax paid by us has been evaded and misutilised and i have not come across any grevience cell who look after this type of cases.

I would be grateful if you guys help me overcome this practice from market and bring a change.