2011 (5) TMI 456 - AT - Service Tax

Consulting Engineers services - Under valued - reimbursement of expenses - The tax stand confirmed against the appellants on the ground that they have under valued the said services by claiming reductions on account of various reimbursable expenses in respect of remuneration for local staff transportation office rent office furniture and equipments miscellaneous cost accommodation cost for consultant communication and various other factors - The adjudicating authority has also not accepted the appellant s stand that in respect of part services which are being granted by them as sub-consultant the main consultant has already discharged their service tax liability in respect of that part of the contract - the appellants have placed on record the certificates by the main consultant the adjudicating authority has not accepted the same on the ground of the same being fake and cryptic - Hence production of subsequent detailed certificates by the main consultant as also the fact of allowing the deductions on account of various reimbursable expenses is relatable to the facts and is required to be verified at the original level we are of the view that the appeal be remanded to the original adjudicating authority for examining the above aspect and fixing the appellant s duty liability - Appeal is thus allowed by way of remand.

Summary

Issues:
Demand of service tax confirmation and penalty imposition under Sections 78, 76, and 77 of the Finance Act, 1994 based on undervaluation of services and disputed deductions.

Analysis:
The Appellate Tribunal, after rejecting an adjournment request, proceeded to decide the appeal concerning the confirmation of a service tax demand of Rs. 2,06,70,000 and penalties totaling Rs. 4,13,40,000 under Sections 78, 76, and 77 of the Finance Act, 1994. The appellants, engaged in providing taxable services as Consulting Engineers, were accused of undervaluing services by claiming reductions on various reimbursable expenses. The adjudicating authority rejected the appellant's claim that the main consultant had already discharged service tax liability for services provided as sub-consultants, deeming the certificates provided as fake and cryptic. However, the appellants later presented detailed certificates from the main consultant, potentially reducing their duty liability by around Rs. 33 Lakhs.

During the modification application hearing, it was revealed that 9 reimbursable claims were confirmed against the appellants, with deductions being denied. The appellants argued that out of 18 deductions claimed, the department had allowed 7 deductions for subsequent periods, potentially reducing the demand by around Rs. 45 Lakhs. Considering the new evidence presented, including detailed certificates and allowed deductions, the Tribunal remanded the matter to the original adjudicating authority for further examination and determination of the appellant's duty liability. The impugned order was set aside, and the Commissioner was tasked with making a fresh decision based on the additional evidence provided by the appellants, ensuring the appellants have the opportunity to contest their case. The appeal was allowed by way of remand, emphasizing the need for a thorough verification of the facts presented.