Assessment - Service Tax Practice Manual / Ready Reckoner - Service Tax

Assessment A. Self-Assessment B. Access to registered Premises C. Verification of return filed under section 70 D. Best Judgment Assessment ================== A. Self-Assessment Section 70 of the Act provides that, every person liable to pay service tax shall himself assess the tax due on the services provided by him and .. From the above, it is clear that every assessee is duty bound to assess the tax himself in respect of services provided by him in a particular period and pay the tax on the basis of self-assessment. ================== B. Access to registered premises As per Rule 5A(1) of Service Tax Rules , an office authorised by the Commissioner shall have access to any premises registered under these rules for the purpose of carrying out any scrutiny, verification and checks as may be necessary to safeguard the interest of revenue. Further as per Rule 5A (2) , Every assessee, shall, on demand make available to the officer empowered under sub-rule (1) or the audit party deputed by the Commissioner or the Comptroller and Auditor General of India, or a cost accountant or chartered accountant nominated under section 72A of the Finance Act, 1994, - (i) the records maintained or prepared by him in terms of sub-rule (2) of rule 5; (ii) the cost audit reports, if any, under section 148 of the Companies Act, 2013 ; and (iii) the income-tax audit report, if any, under section 44AB of the Income-tax Act, 1961 , for the scrutiny of the officer or the audit party, or the cost accountant or chartered accountant, within the time limit specified by the said officer or the audit party or the cost accountant or chartered accountant, as the case may be. - C. Verification of return filed under section 70 Currently there is no provision in the Act which prescribes the procedure for verification of return by the central excise authorities. Does it mean that that the return filed by the assessee under section 70 is final and no further action can be taken on the basis of this return? The answer is certainly no. There are certain provisions which enable the excise authorities to check and verify the return or seek records from the assessee. Section 83 of the Act extends many provisions of the Central Excise Act, 1944 to the service tax. Accordingly section 14 of the Central Excise Act, 1944 is extended to this Act. As per section 14 , excise authorities are empowered to issue summons to attend the office or to produce a document or other thing in any enquiry which such officer is making for any purpose of this act. Though the provisions of section 14 are not expected to be applied on routine basis, but this is very important tool in the hands of central excise authorities. Further, section 73 of the act provide the provisions for recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded. A multi billion question arises that how this section can be used practically for such recovery. Only the option is before the central excise authorities to invoke the provisions of section 14 of the Central Excise Act, 1944 to make the section 73 effective. Section 73 prescribes a time limit of 30 months ( original 12 months, then 18 months and now 30 months) from relevant date for serving a show cause notice to assessee. Further in case of fraud, collusion, wilful mis-statement, suppression of facts and contravention of any provisions, show cause notice can be served within a period of five years . Further, section 12 of the Central Excise Act, 1944 has been extended to service tax act in accordance with Section 83 . Section 12 of the Central Excise Act, 1944 extends the provisions of Customs Act, 1962 to the Central Excise Act and consequently they are automatically extended to service tax. In other words certain provisions of Customs Act with respect of levy and exemption etc. are extended to service tax . And, consequently the central excise authorities, though in a very rare circumstances, may invoke those provisions to ascertain the service tax liability of the person providing services and filed the return under self-assessment scheme under section 70 of the Act . ================== D. Best Judgment Assessment Best Judgement Assessment is one which is passed in accordance with the best of judgement of a Central Excise Officer. Finance Act, 2008 w.e.f. 10.5.2008, provisions of Section72 amended to provide the circumstances in which best judgment assessment can be made. Best judgement Assessment can be made, in case person fails to make a return of service tax or where a person having made a return fails to assess the tax in accordance with the provisions of the Act/ rules. The assessment made on the basis of the assessee s accounts and those made on the best judgement basis are totally different type of assessments. Refer case - CST V. H.M.Abdulali 1973 (4) TMI 49 - SUPREME Court .