Bombay High Court Stays Show Cause-Cum- Service Tax Demand Notice Issued to CA

Bombay High Court Stays Show Cause-Cum- Service Tax Demand Notice Issued to CA

The Bombay High Court (HC) division bench of Justices Milind N. Jadhav and Ujjal Bhuyan, in the case of Amrish Rameshchandra Shah (Petitioner) v. Union of India & Ors. (Respondent) directed the respondent to file the reply, stayed the show cause-cum-demand notice

Mr. Amrish Rameshchandra Shah (petitioner/ assessee) is a Chartered Accountant (CA) and a partner in a firm. The Assessee was served with a show cause-cum-demand notice dated 30 December 2020, based on the Income Tax Return (ITR) filed by the firm for the relevant year.

Based on the declaration made in the ITR, a view has been taken by the respondent that the remuneration received by the assessee from the firm is subject to service tax and since this has not been paid, impugned show cause-cum-demand notice has been issued.

On behalf of the assessee, it was submitted that the impugned show cause-cum-demand notice has been issued without jurisdiction. The firm had filed an ITR and has paid service tax and there was no default on his part.

The assessee relied on a decision of the Central Excise and Service Tax Appellate Tribunal (CESTAT), given in the case of Alpa Management Consultants P. Ltd. v. Commissioner of Service Tax, 2007(6) S.T.R. 181, wherein it held that service tax cannot be recovered based on the returns shown in the ITR. The appeal filed by the service tax department before the Karnataka High Court (HC) was dismissed on the ground of maintainability where after service tax department approached the SC. The SC dismissed the civil appeal filed by the Commissioner of Service Tax.

Issue

Whether show cause-cum-demand notice for recovery of service tax can be issued based on ITR?

The HC stated, "There shall be stay of the impugned show cause-cum-demand notice dated 30.12.2020."

The matter is listed on 15 March 2021, for the next date of hearing.