2013 (9) TMI 257 - AT - Service Tax

Service tax demand applicant provided services under security agencies and cleaning services Held that - Applicant had provided unaccounted services and issued parallel/duplicate invoices - amount of demand reduced by giving benefit to the applicant on cleaning service - service provided in Jammu & Kashmir, on traded goods, reimbursement of expenses and also on the maintenance and management service - service provided in special economic zones - court find that applicant had maintained the parallel invoices - applicant could not explain the reasons of parallel invoices - Any transaction by way of issue of parallel/duplicate invoice is never reflected in books of accounts. Pre-deposit of tax court ordered to submit one- fourth of the duty amount rest is waived till th final disposal application decided conditionally in the favour of the applicant.

Summary

Issues:
Waiver of pre-deposit and stay of recovery of Service Tax, interest, and penalties under sections 78 & 76 of the Finance Act, 1994.

Analysis:
The case involved an application by M/s. Varsed Detective & Security Pvt. Ltd seeking waiver of pre-deposit and stay of recovery of a substantial amount along with interest and penalties imposed under sections 78 & 76 of the Finance Act, 1994. The applicant provided security agencies and cleaning services to clients. The Department alleged that the applicant was evading Service Tax by collecting it from clients but not remitting it to the Government. It was also found that the applicant issued multiple invoices with the same number, leading to discrepancies in the total value of services provided. A Show Cause Notice was issued, demanding a significant sum as Service Tax, interest, and penalties. The Commissioner confirmed a reduced amount to be paid by the applicant, taking into account various factors.

The Advocate for the applicant argued that the compensation for services provided was reflected in bank statements and balance sheets, disputing the allegation of clandestine service provision. He also contended that some invoices had customer names but no verification was done with them. The applicant claimed entitlement to cum tax benefit and argued against the imposition of penalties due to reasonable cause for non-payment of Service Tax.

The Department, represented by the learned DR, supported the Commissioner's findings, emphasizing that the applicant operated clandestinely from undisclosed offices and issued parallel invoices to evade Service Tax. After considering both sides, the Tribunal found discrepancies in the applicant's operations, particularly in the issuance of parallel invoices without proper accounting. The Tribunal directed the applicant to deposit a specified amount within a timeframe and comply with reporting requirements. Upon compliance, the remaining balance would be waived, and recovery stayed pending appeal disposal.

In conclusion, the Tribunal upheld the Commissioner's decision regarding the amount to be paid by the applicant but required an additional deposit due to the unexplained discrepancies in the invoicing practices. The judgment highlighted the importance of proper documentation and transparency in financial transactions to avoid allegations of tax evasion and non-compliance with tax laws.