2006 (11) TMI 572 - AT - Service Tax

Service Tax Demands - input credit - recovery on the basis of return - HELD THAT - We notice that the issue involved in this appeal has already been decided in the case of M/s. Tempest Advertising 2006 (9) TMI 31 - CESTAT,BANGALORE . Thus, In terms of this Judgement, Service Tax cannot be recovered based on the returns shown in the Income Tax Returns, as the provisions of Income Tax requires declaration of amounts still due from the debtors, while in the case of Service Tax, the same has to be paid when recoveries are made. The appellants have been paying the amounts as and when they are recovering the amounts. They have also not taken the credit as alleged by the Commissioner in his written submission before the Tribunal. Furthermore, there is no suppression of facts and demands are also time barred. Therefore, in terms of the above noted judgments, the impugned order is set aside and appeal allowed with consequential relief, if any.

Summary

Issues:
Challenge of demands based on Income Tax returns for Service Tax calculation.

Analysis:
The appellants contested the confirmation of demands based on amounts shown due in Income Tax returns, arguing that these amounts were not received and thus, the Service Tax should be discharged only on amounts actually received. The Tribunal had previously ruled in similar cases that Service Tax cannot be demanded on amounts due from parties as per Income Tax returns. The appellants maintained they paid Service Tax upon recoveries and did not take credit for amounts due. They also argued that there was no suppression of value in ST-3 returns and demands were time-barred.

The learned JDR supported the impugned order, relying on the Commissioner's written submission.

Upon careful consideration, the Tribunal noted that the issue had been previously decided in similar cases. The Tribunal reiterated that Service Tax must be calculated on total receipts, not on amounts due from customers as per Income Tax returns. The Tribunal referenced relevant sections of the Finance Act 1994 and Service Tax Rules, highlighting that tax payment is contingent upon actual receipt of payments for taxable services. The Tribunal granted full stay previously due to non-receipt of taxable service value, leading to the conclusion that the Service Tax was not liable to be paid. The Tribunal allowed the appeal, finding in favor of the appellant's contention and setting aside the impugned order.

In conclusion, the Tribunal upheld the appellant's contention that Service Tax cannot be recovered based on amounts shown in Income Tax returns, as tax payment is contingent upon actual receipts. The impugned order was set aside, and the appeal was allowed with consequential relief, if any.