At present, in cases other than fraud, suppression etc cases the Service Tax Authorities can issue Show Cause Notice (SCN) within 18 months from the relevant date for non/short payment of Service Tax.
Now, vide amendment to section 73 of the Finance Act, 1994 (Act) it is being proposed to increase the limitation period from current 18 months to 30 months.
The catch in case of aforesaid amendment is, the Revenue Authorities shall have effectively 36 months (30 months plus 6 months). This is in view of the fact that to issue notice since ‘relevant date’ for demand of service tax is date or due date of filing the Service Tax return thus the Authorities will get 36 months (30 months plus 6 months) time to issue notices as discussed in the example below:
|Demand Period||April 2016 to September 2016|
|Date of filing of ST-3||25 October 2016|
|Due Date of filing ST-3||25 October 2016|
|Proposed normal period of limitation for issuance of notice||25 April 2019|
Thus effectively, the demand for the month of April 2016 may also be raised by the Authorities by 25 April 2019 (instead of April 2018 as provided earlier).
From extension of 12 months to 18 months (vide Union Budget 2012) and to now 30 months for issuing demand notices by Authorities would leave assesses wondering during this long period whether he has paid Service Tax correctly or not. This in turn shall give sleepless nights and anxiety to the assesses for two and half years.
It appears that the Government is taking all the possible measures for better control and accountability of the assesses, however failed/ forgot to apply the same in case of its own people.
The authors are Pratik Shah – Partner and Khushbu Trivedi – Executive from SKP Business Consulting LLP and the above views are personal.