Notice to UT for not paying service tax of Rs 34 cr

The Service Tax Division of the Department of Central Excise and Service Tax Commissionerate has served a show-cause notice on the UT Administration for non-payment of service tax to the tune of Rs 34 crore. The administration rents out commercial property on a leasehold basis. The service tax that is to be levied on this has not been paid.

Following this, the Department of Central Excise and Tax Commissionerate has served the show-cause notice, asking the administration to explain why the tax has not been paid. The tax for around five years has reportedly been pending.

Confirming that the notice had been issued, an official of the Service Tax Division said the officials of the administration would be given three chances for a public hearing. The administration could challenge the notice and argue against it. In case no one appeared on behalf of the administration then an ex-parte decision would be taken and it would be considered that the administration had accepted the notice.

The administration would then have to pay the tax. In case of non-payment, the commissionerate can approach the High Court for redressal. Service tax is levied on the commercial property like showrooms that the administration rents out on a leasehold basis.

UT Finance Secretary V K Singh said, "A show-cause notice has been received. There are some new rules that were made in 2007 and an amendment brought about in 2010. The department is interpreting the rules harshly. The legal angle of the issue would be examined."

He added, "The tax is collected by the Estate Office from the allottees. The allottees would have to pay the additional tax that would then be paid to the Department of Central Excise and Service Tax. We are examining the issue and a decision would then be taken."

The department collects around Rs 6,000 crore as service tax annually. The collection in the financial year 2012-13 is expected to be more with additional services brought under the ambit of taxes. Apart from 17 services that are in the negative list, service tax is levied on all others.

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