IMP clarification for builders and developers regarding service tax Must Register & File Returns Even if Stay Granted, says Department

Court grants stay. Restrains the department from taking any coercive steps. But arrogant officials threaten that if you do not register and file returns, the Department shall slap penalty for concealment, and imply that the Court granting stay to you will not be able to save you from the wrath of the Department. In your own interest, better pay tax despite the stay, says the Commissioner. Or else, face the investigations and show cause notices.

Surprisingly, almost all of them after retirement, become pro-assessees and start attacking the Department they earlier served. The pendulam of arrogance swings the other sides, and they become vehement protector of assessees facing arbitrariness from the Department.

Now read the text circulated by TIOL : Service Tax officials Sushil Solanki, Commissioner Service Tax, Mumbai I and Wilson Hangshing, Commissioner Service Tax, Mumbai II met the MCHI team representing the developer community, to explain the implications of the recent High Court order on the issue. The Court ruled that realty developers would not have to pay the service tax, but they need to get their books assessed. Commissioner issued the following clarification:

A meeting was held with members of MCHI (Maharashtra Chamber of Housing Industry) to explain to them the service tax provisions with regard to construction activities.Following legal position was clarified by us in the meeting.?

++ Mumbai High Court has issued interim order in July 2010 (2010-TIOL-526-HC-MUM-ST) on the petition of MCHI that "no coercive steps shall be taken against the petitioners for recovery of service tax in relation to the provisions in question, but it is clarified that assessments may proceed in accordance with law”. By a subsequent order, the petitioners were allowed to deposit service tax with the high court.

++ In the meeting, it was clarified that even though there is stay against recovery of service tax but all service providers must take registration and file service tax return in time. In case of failure to file return, department may initiate investigations for issue of show cause notices and extended period would be available to the department.

++ It was also clarified that it is in their interest to collect service tax and pay to Government or to the court, because in case the petition is decided against them, they would be saddled with huge liability.

++ It was also clarified that stay order of court is available only to the person who has been admitted as petitioner by the court and not to others.

++ Issues like taxability in case of redevelopment and SRA project was also explained.

++ It is also brought to your knowledge that said case is still pending before High Court

By Rebecca Andrews