2012 (6) TMI 215 - AT - Service Tax

Income declared in the balance sheet filed with Income Tax department is higher than the income declared in their ST-3 returns as revealed by CERA audit assessee submitted during the hearing that after the audit was conducted by the CERA party, the officers of the Service Tax wing of the department also conducted the audit Held that - The period covered by the CERA party is also covered by the audit party of the department and therefore it can be said that the department has conducted the verification of the correctness of the ST-3 returns filed and whatever deficiencies were found, the same has been made good by the appellant - the demand confirmed by the lower authorities amounts to duplication of the demand in respect of the amount already paid by the appellant - both the lower authorities have not considered the audit report of Service Tax wing the fact that the amount has been deposited has also been mentioned in the audit report itself - no indication as to why the audit report and the worksheet prepared by the appellant for the purpose of audit is not acceptable to the lower authorities - the impugned order is set aside and the matter is remanded to original adjudicating authority to adjudicate the matter afresh- in favour of assessee.

Issues:
1. Alleged contravention of Section 68 of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules, 1994 for failure to pay service tax.
2. Rejection of appeal against the order confirming the demand of service tax.
3. Consideration of whether the amount deposited is sufficient as a pre-deposit condition for hearing the appeal.
4. Discrepancy in the basic cost for services provided as per ST-3 returns and balance sheet leading to short payment of service tax.
5. Lack of consideration of the audit report of the Service Tax wing by lower authorities.

Analysis:

1. The appellant, engaged in taxable services, was found to have a differential value between income declared in Income Tax returns and ST-3 returns for the years 2004-05 to 2006-07, leading to an alleged contravention of Section 68 of the Finance Act, 1994. A show cause notice was issued, resulting in the confirmation of a service tax demand, interest, and penalties by the adjudicating authority.

2. The appeal filed against the order confirming the service tax demand was rejected, prompting further proceedings.

3. While the matter was initially listed to determine the sufficiency of the pre-deposit amount for hearing the appeal, it was concluded that the Tribunal could not make a final decision at that time. However, considering the appellant had already paid the service tax amount calculated by the audit party, the appeal was taken up for final disposal.

4. An audit by the Central Excise party revealed discrepancies in the basic cost for services provided during 2004-2007, resulting in a short payment of service tax. The appellant had already paid the indicated amount with interest after reconciliation of figures, which was also mentioned in the audit report. The lower authorities failed to consider the audit report of the Service Tax wing, leading to a duplication of the demand for the same period already discharged by the appellant.

5. The Tribunal set aside the impugned order and remanded the matter to the original adjudicating authority for a fresh adjudication. The lower authorities were directed to consider the audit report and provide specific reasons for confirming the demand already verified by the department, ensuring a reasonable opportunity for the appellant to present their case.

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