2011 (5) TMI 835 - AT - Service Tax

Demand of service tax interest and penalty - liability to pay service tax on advances received for executing a service. The requirement was that every assessee had to pay tax when such advances were adjusted for services executed. The Appellant claims that all taxes have been paid accordingly - Counsel submits that out of the amount of Rs. 36 lakhs on this count Rs. 13 lakhs is on account of expenses incurred for getting soil tests done Held that - onus is on the Appellant to first give separate worksheets showing invoice numbers date and amount involved in respect of each issue separately. Thereafter they should produce evidence which they are claiming to be having. Such evidences along with detailed submissions should be submitted to the adjudicating authority thereafter the adjudicating authority shall give personal hearing and issue a speaking order which will enable the Tribunal to decide on grievance if any without further remand to lower authority appeal are disposed of

Summary

Issues:
1. Tax liability on advances received.
2. Tax demand on unbilled amounts.
3. Tax on value of goods supplied.
4. Tax on expenses incurred and reimbursed.
5. Liability of sub-contractor for service tax.

Analysis:

1. Issue-I - Tax liability on advances received:
The Appellant argued that before 16-6-2005, there was no obligation to pay service tax on advances received for services. They contended that taxes were paid when advances were adjusted for services rendered. The Appellant claimed to have complied with tax payments accordingly.

2. Issue-II - Tax demand on unbilled amounts:
The Appellant contended that tax could only be demanded on amounts actually received, not on bills raised. However, specific findings on this issue were lacking in the original order.

3. Issue-III - Tax on value of goods supplied:
The Counsel argued that exemption under notification 12/2003-S.T. was applicable, and there was no requirement to pay service tax on the value of goods sold. This issue was raised but not addressed in the original order.

4. Issue-IV - Tax on expenses incurred and reimbursed:
Regarding expenses incurred and reimbursed, the Appellant highlighted that certain expenses were as a pure agent for clients, which, as per Service Tax (Determination of Value) Rules, should not be part of taxable value. The Appellant referenced past clarifications and notifications to support their argument. However, the original order lacked a detailed examination of this issue.

5. Liability of sub-contractor for service tax:
The Appellant raised a plea that in some contracts, they were acting as a sub-contractor, and the primary contractor should bear the service tax liability. They cited a Tribunal decision to support their stance.

The Appellate Tribunal found the original order to have several deficiencies and decided to set it aside. The matter was remitted to the adjudicating authority for a fresh consideration of all issues, both factual and legal. The Appellant was directed to provide detailed documentation and evidence within a specified timeline for a thorough review. The Tribunal emphasized the need for a comprehensive examination of each issue, including the liability of sub-contractors for service tax. The Appellant was instructed to present all necessary information to enable a well-informed decision without further remand to lower authorities. Both the Stay Application and Appeal were disposed of with these directions.