The Central goods and services tax (GST) department has been issuing show cause notices (SCNs) for FY2014-15 for difference in receipts as per service tax return and income tax (I-T) return in bulk without going into the legality and without fulfilling the mandate given by the law for issue of such SCN and notices have been issued even to professionals like doctors, who are Corona warriors, and are not even liable to service tax levy, says a report quoting The Chartered Accountants Association.
In the report, Facelesscompliance.com says
, "The notices have been issued on the basis of discrepancies in I-T and service tax even in cases, where departmental audit has already been done. Notices have been issued blanket and without any due diligence, leading to creation of unnecessary hardship for assesses. An attempt is being made by the departmental officers to create disputes and demands for reasons best known to them."
According to the letter sent by the CA Association to the finance minister Nirmala Sitharaman, show cause notices are being issued solely on the ground that receipts shown as per the ITR are different from receipts shown in the service tax return. Further, in case of persons who were not liable to pay service tax, notices have been issued to make roving enquires on the basis of their ITR and these notices are asking for a plethora of information for three to five years. Assesses are being harassed by such vague notices making roving enquiries, it added.
The CA Association also points out limitations of the period for these notices. It says, "The SCNs have been issued with a pre-determined 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."
"Officers cannot make roving enquiries and issue notices beyond the limitation period of one year. However, notices have been issued its bulk in defiance of the law. Without recording any reason which indicates any fraud or misstatement, notices are being issued to one and all. Extended period of five years can be availed by service tax officer only if he is satisfied that there is fraud or wilful misstatement. However, blanket notices have been issued to all without any justification," the Association says.
Explaining the reasons behind a possible mismatch between the ITR and service tax, the Association says, difference in receipts of ITR and service tax or non-application of service tax number does not tantamount to any fraud leading to notices asking for five years’ old information.
"Enquiry up to five years can be made only if service tax has not been paid due to fraud, collusion, wilful misstatement or suppression of facts," it says, adding, "If receipts, as per I-T are not tallying, it does not mean there is fraud, collusion, wilful misstatement 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."
According to the Association, the extension in time limit till 31 December 2020 was provided for completion of pending proceedings or filing of appeals and not to make roving enquiries and harass the assessees. "Sending notices, calling for information more than five years old, is uncalled for. In many cases even when replies have been sent by mail or post, notices are being sent again. This is creating a situation where the assessee has to contact the relevant officer personally or through an authorised representative, which is like making a mockery of the claims of the government for faceless resolution of issues," it added.
The CA Association requested the FM to set up a proper enquiry regarding these illegal show cause notices.