Demand not sustainable only because the Assessee had admitted Service tax liability

[Bimal jain]

Dear Professional Colleague,

Demand not sustainable only because the Assessee had admitted Service tax liability

We are sharing with you an important judgement of the Hon’ble High Court of Andhra Pradesh, in the case of Commissioner, Customs and Central Excise, Meerut-I Vs. RS. Travels [2014 (10) TMI 817 - UTTARAKHAND HIGH COURT] on following issue:

Issue:

Whether it is justified to confirm demand against the Assessee applying the principle of estoppel only because the Assessee had admitted the Service tax liability?

Facts and Background:

In the instant case, the Revenue has filed an appeal before the Hon’ble High Court of Uttarakhand raising the question of principle of estoppel in law relating to the taxability of RS. Travels (“the Assessee”) on the basis that services were being rendered under the rent-a-cab scheme (“impugned activity”) and the Assessee had admitted its Service tax liability.

Whereas the Hon’ble High Court of Uttarakhand on August 6, 2014 has decided that impugned activity is not taxable in the case of Commissioner, Customs and Central Excise Vs. Sachin Malhotra, Raj Kumar Taneja, M/s. Shiva Travels [2014 (10) TMI 816 - UTTARAKHAND HIGH COURT] (“Shiva Travels case”).

The Revenue de-linked Shiva Travels case from the present case on the basis of the fact that the Assessee had effected payments and also filed affidavits to the effect that he will be paying the balance of the amount.

However, the Assessee relied upon the judgment of the Hon'ble Apex Court in the case of Dunlop India Ltd. Vs. Union of India and others [1975 (10) TMI 94 - SUPREME COURT OF INDIA] and Mafatlal Industries Ltd. and others Vs. Union of India and others [1996 (12) TMI 50 - SUPREME COURT OF INDIA] and submitted that the amounts were paid under compulsion.

Held:

At the outset, the Hon’ble High Court of Uttarakhand observed that when there is only a contract of hire and there is no renting of the cab, there is no question of the Assessee being assessed in respect of services rendered in connection with rent–a-cab service as there is no renting at all.

It was further held by the Hon’ble High Court that Article 265 of the Constitution of India mandates that no tax can be levied or collected except as provided by law. Accordingly, mere fact that the Assessee had made some payments and also made promise to make further payments cannot be used against our refusing to interfere with the impugned order.

Hope the information will assist you in your Professional endeavours. In case of any query/ information, please do not hesitate to write back to us.

Thanks and Best Regards.

Bimal Jain
FCA, FCS, LLB, B.Com (Hons)

Flat No. 34B, Ground Floor, Pocket - 1,

Mayur Vihar, Phase - I,

Delhi – 110091, India

Desktel: +91-11-22757595/ 42427056

Mobile: +91 9810604563

Email: [email protected]

Web: www.a2ztaxcorp.com

Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the authors nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this document nor for any actions taken in reliance thereon.

Readers are advised to consult the professional for understanding applicability of this newsletter in the respective scenarios. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. No part of this document should be distributed or copied (except for personal, non-commercial use) without our written permission.