Service Tax - Closure of cases under Section 73(3)
As per Section 73(3) of the Finance Act of 1994,
(3) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person chargeable with the service tax, or the person to whom such tax refund has erroneously been made, may pay the amount of such service tax, chargeable or erroneously refunded, on the basis of his own ascertainment thereof, or on the basis of tax ascertained by a Central Excise Officer before service of notice on him under sub-section (1) in respect of such service tax, and inform the Central Excise Officer of such payment in writing, who, on receipt of such information shall not serve any notice under sub-section (1) in respect of the amount so paid:
Provided that the Central Excise Officer may determine the amount of short payment of service tax or erroneously refunded service tax, if any, which in his opinion has not been paid by such person and, then, the Central Excise Officer shall proceed to recover such amount in the manner specified in this section, and the period of “one year” referred to in sub-section (1) shall be counted from the date of receipt of such information of payment.
Explanation. — For the removal of doubts, it is hereby declared that the interest under section 75 shall be payable on the amount paid by the person under this sub-section and also on the amount of short payment of service tax or erroneously refunded service tax, if any, as may be determined by the Central Excise Officer but for this sub-section.
The Hyderabad III Commissioner has noticed that different practices for closure of cases covered under Section 73(3) of the Finance Act, 1994 are being followed in the Commissionerate. There is neither any separate record prescribed nor is there any standard procedure for dealing with such cases.
The Commissioner feels that closure cases under Section 73(3) of the Act is akin to exercising quasi judicial function in as much as the competent authority has to decide about absence of evidence or grounds for invocation of proviso to section 73 and apply Section 73(3) of the Act. It is thus administrative propriety that closure of cases of cases under Section 73(3) of the Act should be carried out with the approval of the Commissioner who is the reviewing authority for the lower adjudicating authorities. If the case arises out of Audit objection then the closure will be approved in the Monthly Monitoring Committee (MMC) meeting chaired by the Commissioner, Anti-Evasion and Divisional cases will be put up to the Commissioner through the Additional Commissioner (Anti-Evasion).
The Commissioner further directs, “Needless to mention that in all such cases full recovery of Service Tax with interest along with request for waiver of Show Cause Notice are necessary before closure of the case under Section 73(3) of the Act can be considered. Format for the letter to be obtained from the assessees is in the Annexure (enclosed). It is also imperative that the investigating officers should clearly certify that no evidence leading to invocation of the grounds for extended period as envisaged in the proviso to Section 73 are involved in the cases considered for closure under Section 73(3) of the Act.
After the approval of the competent authority, details of these cases must be entered in a separate register in the Division/Hqrs. Audit/Hqrs. Anti-Evasion branches.
The Commissioner has also, in this internal circular, prescribed a proforma for the letter to be given by the assessee for avoiding penalty and non-issuance of SCN. How will the assessee come to know about this?