Demand sustains for wrong classification

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..... Demand sustains for wrong classification
Query (Issue) Started By: - MANDAVILLI RAMAKRISHNA Dated:- 20-10-2013 Last Reply Date:- 26-10-2013 Service Tax
Got 4 Replies
Service Tax
Dear Experts, If X rendered services of construction activity but registered under cleaning services. Department issued SCN dt. 10.01.2013 after completing ST audit, for payment of tax and penalty and intere .....

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..... st classifying the construction activity as cleaning services. Adjudication PH completed. Adjudication orders are awaited. Can we now question the validity of the SCN now or is it better to wait till the adjudication orders come? We want to avail the VCES scheme and to pay the taxes. Shall we proceed with/ without intimation to department about the wrong classification. Regards RK Reply By .....

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..... Brijesh Verma: The Reply: Dear Sir In my view, since SCN has been issued before 1.3.2013 i.e. the VCES cut off date, so you might not be able to avail VCES. However, if tax along with interest is paid before adjudication order even, then you might get benefited by some judgments which state that if tax and interest is deposited before adjudicating order, then penalty should not be levied. Rep .....

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..... ly By MANDAVILLI RAMAKRISHNA: The Reply: Dear Sir, Can we question validity of the adjudication order after receiving, basing on wrong classfication of the service as the service provided was construction activity but demand raised for cleaning services. Reply By Brijesh Verma: The Reply: Sir, As far as raising a doubt against classification after adjudication is concerned, it might be quite .....

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..... difficult if the same was not raised at SCN stage. However, Jurisprudence is the mother of all laws and if any plea was not taken earlier then at Com(A) stage the same may be admitted by COM (A) subject to rules made in this regard. Reply By Ashok Jogalekar: The Reply: Intentionally wrongly classifying a service for getting financial benefits attracts penalties but due to classification error i .....

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..... f there is no financial loss to the revenue, then, you may get away with token penalty. Benefit of penalty is available only in case the tax and interest is paid before issue of SCN. Now you will have to wait for O-I-O and take it further.
Discussion Forum - Knowledge Sharing .....

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