2016 (3) TMI 1140 - AT - Service Tax

False VCES declaration - rejection due to difference of taxable value taken by the department and as claimed by the appellant for calculation of service tax dues - demand - Held that - I find that as per the submissions made by the Ld. Advocate as reproduced above and the findings of the Ld. Commissioner there are variations in the stand taken by both sides. In my view, the appellant should be given an opportunity to explain their case regarding quantification as observed by the adjudicating authority viz-a-viz claimed by the appellant. I therefore of the view that matter needs to be remanded to the original adjudicating authority - appeal allowed by way of remand.

Summary

Issues involved:
Discrepancies in taxable value calculation for service tax dues, rejection of VCES declaration, demand of service tax under Section 111(1) of the Finance Act, 2013, interest and penalties imposition.

Analysis:

1. Discrepancies in Taxable Value Calculation:
The dispute in the case arose due to differences in the taxable value taken by the department and claimed by the appellant for the calculation of service tax dues. The adjudicating authority rejected the VCES declaration and confirmed the demand of service tax under Section 111(1) of the Finance Act, 2013, along with interest and penalties.

2. Rejection of VCES Declaration:
The appellant argued that they were not given an opportunity to explain the mismatch in figures between the Profit and Loss Account and the value claimed. The appellant contended that the department did not provide reasons for considering the declaration as substantially false before issuing the show cause notice. Additionally, the demand included amounts received beyond the period covered under VCES, which the appellant deemed as without jurisdiction.

3. Imposition of Penalties and Interest:
The Ld. Commissioner imposed a penalty on the appellant under Section 78 of the Finance Act, 1994, with a provision for reduction if paid along with the service tax and interest within a specified time frame. The appellant challenged the penalty imposition, arguing that certain grounds for rejection were beyond the scope of the show cause notice.

4. Judicial Analysis and Remand:
Upon careful consideration of submissions, the tribunal found discrepancies in the quantification of the demand and the rejection of the architect certificate. The tribunal held that the adjudicating authority failed to properly verify the evidence presented by the appellant. Consequently, the matter was remanded to the original adjudicating authority for a fresh order, with instructions to provide the appellant with an opportunity for a fair hearing, submission of documents, and explanation of the discrepancies before passing the adjudication order.

In conclusion, the appeal was allowed by way of remand to ensure a proper examination of the evidence and quantification of the demand, emphasizing the importance of providing the appellant with a fair opportunity to present their case before a final decision is made.