By Puloma Dalal, Jayesh Gogri, Mandar telang Chartered Accountants
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Payment, after issuance of Show Cause Notice, specifically after a recorded statement of the assessee that he was not liable to pay service tax, should be treated as payment of service tax under protest or compulsion.
Facts:
The appellants availed small scale service provider’s exemption and after number crunching exercise, discharged service tax liability for F. Yrs. 2005-2006 to 2007-2008. The appellants deposited service tax under compulsion against issuance of Show Cause Notice. The appellants put forth various arguments to contend that the appellants were neither liable to pay service tax nor interest and penalties. The respondents alleged that the appellants were ineligible for the small scale service provider’s exemption since the appellants had opted for payment of service Tax.
Held:
Having considered the rival contentions, it was found that as per the statement recorded prior to issuance of Show Cause Notice, the appellants had mentioned that they were not liable to pay service tax. The appellants had paid service tax suo moto only after crossing the threshold exemption limit. Further, the appellants had paid service tax after issue of Show Cause Notice which was not a suo moto payment and the same needs to be treated as paid under protest or compulsion. In view of facts of the case, it was held that the appellants would be entitled to get refund of service tax paid under protest.
