2011 (9) TMI 194 - AT - Service Tax

Labour supply service - SSI exemption - non supply of relied upon documents (RUD) to the assessee while issuing SCN - Held that - the matter is required to be remanded to original adjudicating authority who shall provide copies of relevant documents to the appellant and also details received by the Department from the service receiver which forms the basis of Show Cause Notice. The appellant had admitted the Service Tax liability and the question is of calculation of service tax amount payable for the period during which service was rendered and eligibility or otherwise of the assessee for SSI exemption for the year 2005-2006.

Summary

Issues:
1. Demand of Service Tax on labor supplier services.
2. Consideration of SSI exemption claims.
3. Treatment of the amount received for services as cum Service Tax amount.
4. Bifurcation of the demanded amount into different periods for Service Tax calculation.

Analysis:
1. The judgment deals with the demand of Service Tax amounting to Rs.6,15,989 on labor supplier services provided by the appellant to a specific entity. The Department issued a Show Cause Notice based on findings during an audit of the service receiver, alleging that the appellant had a labor supplier contract and received payment for services rendered. The appellant claimed ignorance of Service Tax laws and requested SSI exemption for a specific year. The appellate tribunal found discrepancies in the handling of the case and remanded it for fresh consideration, waiving the pre-deposit requirement.

2. The issue of SSI exemption claims was raised by the appellant, contending eligibility for exemption for a particular year and highlighting the lack of legal knowledge on the appellant's part. The tribunal noted that the lower authorities failed to consider the correct application of the law to the facts presented. The appellant's claim for SSI exemption for a specific year was rejected based on exceeding the limit during the previous year, but eligibility for a different year was not adequately addressed. The tribunal emphasized the need for a fresh review of the SSI exemption issue.

3. The appellant argued that the amount received for services should be treated as cum Service Tax amount, a legal ground not considered by the lower authorities. The tribunal noted the failure to address this issue and directed the reconsideration of this legal aspect by the adjudicating authority. The lack of proper consideration of legal grounds was highlighted as a significant flaw in the previous proceedings.

4. Another issue raised was the bifurcation of the demanded Service Tax amount into different periods without verifying when the services were rendered. The tribunal emphasized the importance of correctly assessing the Service Tax liability based on the period of service provision. The failure to consider this aspect by the lower authorities was deemed a legal issue requiring proper evaluation. The tribunal directed the original adjudicating authority to reevaluate the matter, considering all relevant issues and providing a reasonable opportunity for the appellant to present their case.