2012 (7) TMI 442 - AT - Service Tax

Difference in gross receipt of commission received shown in periodical ST-3 returns - demand of differential service tax and imposition of penalty - Held that - As Commissioner (Appeals) rejected the appellant s plea of the differential amount being profit on sale of mobile phones stands rejected by him on the ground of lack of documentary evidence were as as regard the small scale notification benefit stating that it is not established from records that the total value of the services provided by the appellant during the preceding financial year was less than Rs.4 lakhs - instead of assuming the facts should have been got verified by him (Commissioner (Appeals)) from the original field officer - set aside the impugned order and remand the matter to original adjudicating authority for fresh decision, after verifying the facts

Issues:
1. Confirmation of service tax against the appellant.
2. Imposition of penalty and interest.
3. Contesting Show Cause Notice on merits and limitation.
4. Rejection of differential amount as profit on sale of mobile phones.
5. Denial of small scale exemption benefit.
6. Lack of documentary evidence.
7. Verification of factual position and remand to original adjudicating authority.

Confirmation of Service Tax:
The judgment involves the confirmation of service tax of Rs.63,000 against the appellant, along with interest and penalty, based on the discrepancy between the commission received from cell phone companies and the gross receipt shown in the ST-3 returns for the financial year 2006-07. The appellants contested the Show Cause Notice on merits and limitation, claiming that the excess amount confirmed as commission was actually profit from the sale of mobile phones, on which sales tax had already been paid.

Rejection of Differential Amount as Profit:
The Commissioner (Appeals) rejected the appellant's plea that the differential amount was profit from the sale of mobile phones due to lack of documentary evidence supporting this claim. The rejection was based on the absence of trading and financial documentation to prove that the excess amount was earned through the sale of goods. The Commissioner emphasized the need for documentary evidence such as trading accounts, sales, and purchase accounts to substantiate the appellant's assertion.

Denial of Small Scale Exemption Benefit:
Regarding the small scale exemption benefit under Notification No. 6/2005-ST dated 1.3.2005, the Commissioner observed that the appellant failed to establish that the total value of services provided during the preceding financial year was less than Rs.4 lakhs, a prerequisite for availing the exemption. The Commissioner highlighted the necessity of proving the value of taxable services below the specified threshold to qualify for the exemption.

Lack of Documentary Evidence:
The judgment underscores the importance of documentary evidence in substantiating claims related to profit from sales or eligibility for tax exemptions. The Commissioner's decision to deny benefits was primarily influenced by the absence of documented proof supporting the appellant's contentions regarding the nature of income and compliance with exemption criteria.

Verification of Factual Position and Remand:
Given that the grounds for denial of benefits were factual in nature, the judgment emphasized the need for verification of facts by the original field officer rather than assumptions. Consequently, the impugned order was set aside, and the matter was remanded to the original adjudicating authority for a fresh decision after verifying the factual position. The plea of limitation was also left open for reconsideration in the new proceedings. The judgment highlights the significance of factual verification in resolving disputes related to tax liabilities and exemptions.

← Previous Next →