2013 (4) TMI 524 - AT - Service Tax

Short payment of service tax - Held that - This is undisputed fact that in ST-3 Return receipt of Rs. 3,79,04,175 is shown by the respondent & the Commissioner (Appeal) in the impugned order has not made any observation on this figure of 3,79,04,175/- shown in ST-3 Returns and allowed the respondent s appeal relying on Chartered Accountant s certificate, Income Tax provisions and principles of accounting in preparing balance sheet. Therefore set aside the impugned order and remand the case back to Commissioner (Appeal) for deciding the matter afresh after considering the figures shown in ST-3 Returns for the year 2007-2008 and after giving an opportunity of hearing to both sides. Appeal is allowed by way of remand.

Summary

Issues:
1. Short payment of service tax by the respondent during the financial year 2007-2008.
2. Interpretation of ST-3 Return figures and their discrepancy with the balance sheet.
3. Application of principles of accounting and Income Tax provisions in determining service tax liability.

Analysis:

Issue 1: Short payment of service tax
The appeal was filed by the Revenue against an order passed by the Commissioner Central Excise (Appeal) Lucknow, where the respondent, M/s. Vvs Alloys, had allegedly collected commissions on which service tax was due. The department found a discrepancy in the amount of service tax paid by the respondent, leading to a demand notice for the short payment of Rs. 3,68,259. The adjudicating authority confirmed this demand along with interest and imposed a penalty equal to the short payment amount. However, the Commissioner (Appeal) allowed the respondent's appeal, prompting the Revenue to appeal to the Tribunal.

Issue 2: Interpretation of ST-3 Return figures
The Revenue argued that the respondent had suppressed figures in the ST-3 Returns, as per the balance sheet showing a higher commission receipt than what was declared. The respondent contended that they had paid service tax on the actual amount received in the financial year 2007-2008, and any additional amount received in the subsequent year attracted service tax liability in that year. The Tribunal noted the discrepancy in the figures shown in the ST-3 Returns and the balance sheet, emphasizing the need for a thorough examination of these figures to determine the correct service tax liability.

Issue 3: Application of accounting principles and Income Tax provisions
The Tribunal observed that the Commissioner (Appeal) based the decision on a Chartered Accountant's certificate, Income Tax provisions, and accounting principles, but did not address the discrepancy in the ST-3 Return figures. Consequently, the Tribunal set aside the impugned order and remanded the case back to the Commissioner (Appeal) for a fresh decision. The Tribunal directed the Commissioner to consider the figures shown in the ST-3 Returns for the year 2007-2008 and provide both parties with an opportunity to be heard before reaching a final decision.

In conclusion, the Tribunal allowed the appeal by way of remand, highlighting the importance of accurately reconciling the figures in the ST-3 Returns with the balance sheet to determine the correct service tax liability.