Assessee Is Not Responsible For Disclosing Individual Transactions In ST-3 Returns: CESTAT

The Bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) has observed that “it is the responsibility of the Central Excise Officer with whom the Returns are filed to scrutinise them and if necessary, make the best judgment assessment under section 72 of the Finance Act and issue an SCN under Section 73 of the Finance Act within the time limit. If the officer does not do so, and any tax escapes assessment, the responsibility for it rests on the officer.”

The assessee/respondent provided taxable construction services and paid service tax accordingly. During audits of records from 2012-13 to 2014-15, it was discovered that the assessee had not paid service tax on income from transferring development rights, treating it as non-taxable.

The department argued that under section 65B(44) of the Finance Act, 1994, effective from 1.7.2012, such transfers became taxable services, and that, per Rule 5 of the Point of Taxation Rules, 2011, service tax was due.

A show-cause notice was issued, demanding the unpaid tax. However, the Commissioner dropped the demand in the order. The department has challenged this order before the Tribunal.

The department contended that the demand in the case pertains to taxable services in respect of transfer of development rights and, therefore, the demand needs to be upheld.

It was further argued that the date of rendition of service is after the date of the agreement which is the relevant date to be considered to determine if the service was taxable. The date of rendition of service is the date of invoice or the date of receipt of payment. The Commissioner erred in considering the date of agreement as the date of rendition of services and dropping the demand.

The bench opined that “the assessee self-assessed duty and paid service tax as per its view. The allegation in the SCN that the assessee had not disclosed this transaction in its ST-3 returns has no legs to stand on. ST-3 Return does not require transaction wise details. It only requires the assessee to disclose the aggregate value of the taxable services provided during the period, service tax paid, CENVAT credit availed and utilised, etc. There is neither any responsibility on the assessee nor any scope to disclose individual transactions in the ST-3 returns.”

The Tribunal stated that 'the central excise officer' has an obligation to make his best judgment if either the assessee fails to furnish the returns or, having filed the return, fails to assess tax in accordance with the Act and Rules. Thus, although all assessees self-assess tax, the responsibility of taking action if they do not assess and pay the tax correctly squarely rests on the central excise officer, i.e., the officer with whom the Returns are filed.

The assessee was required to file the ST 3 Returns which it did. Unless the Central Excise officer calls for documents, etc., it is not required to provide them or disclose anything else, added the bench.

In view of the above, the Tribunal dismissed the appeal.

Counsel for Appellant/ Department: S. K. Meena

Counsel for Respondent/ Assessee: Varun Gaba

Case Title: Commissioner of Central Goods & Service Tax, Delhi South Commissionerate v. M/s Haamid Real Estate Pvt. Ltd.

Case Number: SERVICE TAX APPEAL NO. 52273 OF 2018

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