2014 (4) TMI 491 - AT - Service Tax

Demand of service tax - Service of supply of tangible goods such as excavators rollers pavers etc. - Held that - Commissioner selected five work orders and all of them give an impression that they are for supply of tangible goods. Further we find that there are definitely some work orders which in our opinion may not be considered as for supply of tangible goods at all. In any case we feel that once the statement is given and work orders were given Commissioner could have asked his subordinate officers to go through the orders and prepare a verification report if he himself could not do so before proceedings to pass the order. In such a case after verification of each order officers could have given a report as to why the item should be treated as supply of tangible goods contract or otherwise and such a report could have been made available to the appellant thereafter adjudication could have been completed. Neither the Commissioner has examined all the work orders and has recorded the conclusion nor all the work orders have been examined and on the basis of examination of all the work orders he has come to the conclusion. Based on five work orders he has come to the conclusion. In our opinion this is not a correct practice. We also find that the transportation charges have simply been assumed to be cost of transportation of the equipment. In our opinion this also requires to be re-examined by the Commissioner - Matter remanded back - Decided in favour of assessee.

Issues:
1. Demand for service tax based on balance-sheet figures
2. Commissioner's reliance on work orders for determining service tax liability
3. Lack of examination of work orders and statements by Commissioner
4. Interpretation of admission by the Proprietor regarding service rendered
5. Need for re-examination of transportation charges and business activities
6. Remand of the matter to the Commissioner for detailed consideration

Analysis:
1. The judgment addresses the issue of a demand for service tax amounting to Rs. 1,30,61,383/- against the appellant based on figures in the balance-sheet for the period from 16.5.2008 to 31.03.2011. The appellant contests this, arguing that the amounts in the balance-sheet under specific headings were not solely for the supply of tangible goods service, as assumed by the Commissioner without proper basis.

2. The Commissioner's reliance on five work orders to determine the nature of service rendered by the appellant is challenged. The appellant asserts that all work orders executed over three years were not examined, and the selection of these five work orders without indicating the basis raises questions regarding the thoroughness of the assessment.

3. The judgment highlights the lack of examination of work orders and statements provided by the appellant by the Commissioner. The failure to verify all work orders and discrepancies between records and statements are noted, emphasizing the need for a more detailed examination before reaching conclusions.

4. The interpretation of an admission by the Proprietor regarding the nature of service rendered is discussed. The Commissioner's reliance on the proprietor's statement is questioned, with the appellant's counsel suggesting that the proprietor may not have fully understood the distinction between supply of tangible goods and the actual work undertaken, thus emphasizing the need for a comprehensive review.

5. The judgment also addresses the need for re-examination of transportation charges and the appellant's business activities. The appellant argues that transportation charges collected were not solely for transporting equipment but also for other business activities, indicating a requirement for verification through invoices and records.

6. In conclusion, the matter is remanded to the Commissioner for a more detailed consideration in light of the observations made. The judgment emphasizes the need for a thorough re-examination of all issues, including the benefit of CENVAT credit, ensuring that the Commissioner re-evaluates the case in accordance with the law before passing a new order.

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