Delhi Service Tax Commissionerate – back into illegal publication of names – Disobedience of law right under the nose of the Board ?
It was just four days ago that we applauded the Delhi Service Tax Commissionerate for following the law in restraining from publication of names of the alleged offenders. – See 21.04.2008 . But four days seems to be too much for the publicity hungry Commissionerate to hold itself. The Commissionerate apparently seems to have scant respect for the Board and the Laws churned out by it is unfortunately superior to the Board. You can understand a Commissionerate situated thousands of miles away from Delhi flouting the laws of the land, maybe out of ignorance, but here is a Commissionerate located in Delhi , having territorial jurisdiction even over the Board office blatantly violating the Board instructions and the laws of the land!
As per the Service Tax (Publication of Names) Rules, 2008, the following procedure has to be followed for publication of names of offenders:-
3. Publication of names and other particulars - Subject to the provisions of these rules, the Central Government may cause to be published in the Official Gazette, print media, electronic media or by any other means, the names and particulars of the following persons, namely:-
(a) Persons, who have been adjudged under the provisions of the Chapter, to have contravened any of the provisions of the Chapter or the rules made thereunder, with intent to evade payment of service tax;
(b) Persons who have been adjudged to pay but has not paid any amount, payable under the provisions of section 73A of the Chapter:
4. Initiation of action and publication.-(1) If the Commissioner of Central Excise, having jurisdiction over such person, is satisfied that it is necessary or expedient in the public interest to publish the names and any other particulars as he deems fit, he shall after due verification of the facts, and the circumstances of the case, forward a proposal in the Annexure appended to these rules for such publication to the jurisdictional Chief Commissioner.
(2) The jurisdictional Chief Commissioner, on receipt of proposal referred to in sub-rule (1), shall within fifteen days from the receipt of such proposal, examine it and if he is satisfied that circumstance of the case justify such publication, may make a recommendation to the Board accordingly.
(3) On receipt of the recommendation by the Board, or on its own, the Central Government may cause publication of the name and other particulars in a manner as specified in rule 3.
So the power to publish the names is with the Central Government and not even the Board. But the Delhi Service Tax Commissionerate seems to be above Board and Government.
Its website yesterday carried news as follows:
In the News
Title: Six Show Cause Notices Demanding Service Tax of 29 Crores issued to KPMG Group Entities
Date : 24/04/2008 10:42:08
Massage: (sic! What he means is message)
KPMG group of Entities have been issued Show Cause Notices demanding Service Tax amounting to Rs.29 Crores. The details of Show Cause Notices issued are as under: -
KPMG (Partnership firm) 12.63 Crores
KPMG Advisory Services (P) Ltd. 2.59 Crores
KPMG (I) Pvt. Ltd. 3.77 Crores
KPMG Resource Centre (P) Ltd. 1.66 Crores
BSR and Co. 8.9 Crores
BSR and Associates 0.10 Crores
These Show Cause Notices have been issued to them on the following issues: -
On Foreign remittances made to entities abroad in respect of professional services received by them.
On “Out of Pocket Expenses” billed by them.
On services wrongly claimed as Export.
On Regulatory Services.
On Membership Fee during the course of investigation.
KPMG group of entities have already deposited Service Tax amounting to Rs 4.38 Crores and interest of Rs 42 Lacs. This amount has been paid primarily for the period since 16.6.2005 to 31.03.2007 when an explanation was added to Section 65(105) of Finance Act, 1994 making the rendering of such services specifically taxable.
However, the Department has alleged that services provided in India by Foreign service providers were always taxable and liability to pay Service Tax was on service receiver since 16.8.2002 when Rule 2 of Service Tax Rule was amended.
In addition to taxability of services provided from abroad, the Department has also alleged non payment of Service Tax on “Out of Pocket Expenses” billed, non payment of Service Tax on Services wrongly claimed as export, non payment of Service Tax on regulatory services, non payment of Service Tax on membership fee.
This you can access at http://servicetaxdelhi.gov.in/readnews.asp?nid=105
And there was news at http://servicetaxdelhi.gov.in/readnews.asp?nid=106
Title : 129 Crores Demand Issued Against Microsoft India
Date : 24/04/2008 11:44:37
Massage : (sic)
The Service Tax Commissionerate Delhi, issued a Show Cause cum Demand Notice of Rs 129.32 Cores against M/s Microsoft Corporation ( India ) Pvt. Ltd., Gurgaon . The notice has been issued to the company for nonpayment of service tax on various services provided by them, which were detected during the audit of the company. The demands pertains to following issues
1. The marketing and user support service Rs 126.75 Crores
2. Maintenance or repair service Rs 1.28 Crores
3. Convention Services Rs 1.25 Crores
4. Royalty paid to Microsoft Corporation USA Rs. 3,20,896/
The main demand related to the payments received by Microsoft India for providing the services of marketing and user support in India for which the payments were received from the Microsoft Operations Singapore. The department has alleged that these services are consumed in India as the market and the users are located in India and therefore, do not qualify as export.
The Delhi Commissionerate might have made good cases against Microsoft and KPMG, but did it get the permission to publish their names in the official website? As per the law, the names can be published only after adjudication and appeal, but obviously the Delhi Service Tax Commissionerate is not bothered about such niceties of law. Now who will be responsible if Microsoft or KPMG sue the Department for vilification?