2011 (8) TMI 413 - AT - Service Tax

Commissions paid to their foreign agents in the year 2005-06 and 2006-07 - omitted to pay Education Cess - adjusted - There is no evidence or he has no documents to show whether Education Cess was paid subsequently or whether excess payment was adjusted subsequently etc - there was no liability at all for the year 2005-06 in respect of service tax in view of the settled law that the service tax need not be paid in respect of services received from abroad prior to 18.04.06. Under these circumstances appellants have not only paid service tax during the year but also paid in excess - whatever amount appellant paid towards service tax the same as cenvat credit was available and therefore there was no reason for them to evade any service tax - The very fact that they paid excess amount after booking the expenditure also shows that appellants were aware of this position and therefore made the payment of service tax. Apparently non payment of Education Cess is a bonafide omission and done without any intention to evade duty - the stay petition is allowed and the matter is remanded to the original adjudicating authority for fresh decision.

Issues:
1. Failure to pay Education Cess along with service tax.
2. Non-reply to show cause notice and absence at personal hearing.
3. Discrepancies in the original adjudicating authority's consideration of facts.
4. Claim of excess payment of service tax.
5. Lack of evidence regarding subsequent payment or adjustment.
6. Appellant's defense based on the timing of service tax liability.
7. Confusion due to simultaneous issuance of audit report and show cause notice.
8. Consideration of audit report by the original adjudicating authority.
9. Bonafide omission of Education Cess payment.
10. Need for a fresh decision with proper opportunity for the appellant to present their case.

Analysis:
1. The appellant had paid service tax but omitted to pay Education Cess, leading to a demand for recovery. The appellant claimed to have paid excess service tax for a previous period, seeking to adjust the amount against the alleged shortfall in Education Cess payment.

2. The appellant failed to respond to the show cause notice and did not attend the personal hearing before the original adjudicating authority. The authority considered the appellant's reply to an audit report without explicit mention, leading to a lack of proper defense presentation.

3. The learned Commissioner rejected the appeal citing new grounds raised by the appellant. The appellant argued that there was no liability for service tax in the relevant year due to the nature of services received from abroad before a specified date. The absence of a robust defense strategy was noted, especially concerning the limitation issue.

4. Despite the appellant's fault in defense presentation, it was acknowledged that there was no intention to evade duty, given the circumstances of excess payment, revenue neutrality, and the absence of Education Cess payment being a bonafide omission.

5. Due to the peculiar circumstances, including the simultaneous issuance of the audit report and show cause notice, the matter was remanded to the original adjudicating authority for a fresh decision. Both parties agreed to allow the appellant another opportunity to present their case adequately and verify all relevant facts.

This detailed analysis of the judgment highlights the issues, the arguments presented by the appellant, the considerations made by the authorities, and the ultimate decision to remand the matter for a fresh decision with proper opportunity for defense presentation.

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