2013 (9) TMI 394 - AT - Service Tax

Conduct of adjudicating authority in passing order pursuance of remand order - Held that - We find no precedent for the ld. Commissioner to have passed strictures against the Tribunal nor any authority for such brazen insubordination to the appellate jurisdiction and without comprehension of the limitation of his jurisdiction and the limits of his authority. In para 23, in further refutation of the judgment of this Tribunal, the adjudicating authority now holds that the earlier adjudication order was a well reasoned and a just and legal order, again overruling this Tribunal s judgment. The impugned order also concludes that no evidence is emerging from the discussion, and the allegations leveled in the show cause notice were categorically discussed in the earlier adjudication order, passed by his learned predecessor. In para 25, the adjudicating authority reaffirms the findings in the earlier adjudication order, with regard to suppression of material facts with an intent to evade payment of service tax. Paragraphs 26 and 27 reaffirm the correctness of the earlier adjudication order and in para 28, confirmation of service tax, interest and penalty is recorded. Ld. Commissioner has wholly misconceived the limits of his jurisdiction pursuant to the specific order of remand passed by this Tribunal, vide the judgment dated 6.5.2011 and has tried to overreach and trench into the domain of this appellate authority. The impugned adjudication order is also wholly bereft of independent analysis and determination of the issues raised. Advance Payments - taxability Advances received when service was taxable - Consultant Engineer Service - Levy of service tax on subcontract service when main contractor is payment service tax - Levy of service tax on reimbursement of expenses - expenses on behalf of client - Held that - The adjudication order was unsustainable and was accordingly quashed - The matter was also remanded to the Commissioner, Service Tax for passing a fresh adjudication order, in strict compliance and fidelity to the earlier judgment of this Tribunal - Commissioner was directed to pass a de novo adjudication order - The Commissioner shall also issue a notice to the appellant affording an opportunity of personal hearing.

Summary

Issues Involved:

1. Interest on tax due for advance amounts received prior to 16.6.2005.
2. Tax on bills raised but amounts not yet received.
3. Tax on the value of goods supplied for executing services.
4. Tax on amounts incurred on behalf of clients and reimbursed.

Detailed Analysis:

1. Interest on Tax Due for Advance Amounts Received Prior to 16.6.2005:

The appellant contested the liability to pay service tax on advances received for executing a service, arguing that tax was payable only when the advances were adjusted for services executed. The Tribunal had previously set aside the adjudication order and remanded the matter for de novo determination, directing the adjudicating authority to consider evidence showing amounts billed but not received and to provide reasons if such amounts were proposed to be taxed.

2. Tax on Bills Raised but Amounts Not Yet Received:

The appellant claimed that tax liability arises only on amounts received and not on bills raised. The Tribunal directed the adjudicating authority to examine evidence regarding the value of goods sold for execution of contracts and to determine eligibility for concession under Notification No.12/2003-ST. The adjudicating authority was also instructed to consider whether the appellant was eligible for exclusion of value for amounts incurred as a pure agent under Rule 5(2) of Service Tax (Determination of Value) Rules, 2006.

3. Tax on the Value of Goods Supplied for Executing Services:

The appellant contended that exemption under Notification No.12/2003-ST was available and there was no tax liability after availing the exemption. The Tribunal had directed the adjudicating authority to examine this issue separately for the period prior to the notification of the said rules, based on instructions issued by the Board and relevant case laws.

4. Tax on Amounts Incurred on Behalf of Clients and Reimbursed:

The appellant argued that expenses incurred as a pure agent of the clients should not be included in the taxable value of services. It was contended that reimbursements received for agreements executed prior to 19.4.06 could not be taxed. Additionally, the appellant claimed that in some contracts, it acted as a sub-contractor, and the main contractor was liable for service tax. The Tribunal had directed the adjudicating authority to indicate separately the amounts involved where the appellant executed works as a sub-contractor and to determine whether the sub-contractor was liable to pay tax.

Tribunal's Observations and Directions:

The Tribunal found that the adjudicating authority had failed to comply with its specific and unambiguous directions. The adjudicating authority's order was deemed flippant and laconic, lacking independent analysis and reasons. The Tribunal quashed the impugned adjudication order dated 22.1.2013 and remanded the matter for fresh adjudication, directing the Commissioner to pass a de novo adjudication order within eight weeks, in strict compliance with the Tribunal's earlier judgment dated 6.5.2011. The Commissioner was instructed to issue a notice to the appellant within one week, affording an opportunity for a personal hearing, and the appellant was not entitled to adjournment on the scheduled date.

Miscellaneous Application:

The Tribunal allowed the appellant's application for amendment of the name and address, substituting it with "HaskoningDHV Consulting Private Limited IA-D, Vandana Building, 11, Tolstoy Marg Cannaught Place, New Delhi-110001."

Conclusion:

The appeal was allowed, and the matter was remanded for fresh adjudication, with specific directions to the adjudicating authority to comply with the Tribunal's earlier judgment. No costs were awarded.