Payment of Service Tax on Own Volition – Not Barred
A concerned Netizen sent us this:
“A manufacturer is debarred from paying Central Excise duty on own volition if the goods are exempted absolutely. The following sub-section (1A) inserted in Section 5A by the Finance Act, 2005 w.e.f 13.05.2005 lays an embargo in this regard.
(1A) For the removal of doubts, it is hereby declared that where an exemption under sub-section (1) in respect of any excisable goods from the whole of the duty of excise leviable thereon has been granted absolutely, the manufacturer of such excisable goods shall not pay the duty of excise on such goods.
I came across a demand notice issued to a Service provider viz. a job worker alleging that he ought not to have paid any Service Tax as he was entitled for the benefit of the Service Tax notification No. 8/2005-ST dated 01.03.2005 as amended. Incidentally, the demand notice alleged violation of section 5A(1A) of the CEA, 1944 in this regard.
Interestingly, the provisions of section 5A of the CEA, 1944 have not been made applicable to Service Tax matters as this section does not figure in the bunch of sections listed in section 83 of the Finance Act, 1994.
So, the entire proceeding initiated by the department is going to come to a naught sooner or later and the only good thing that would happen is a family of Consultants laughing all the way to the bank!”