2014 (7) TMI 282 - AT - Service Tax

Modification of order - Order of pre deposit - Tax collected from customers but not deposited - Held that - Appeal memorandum wherein it has been stated that the entire amount of service tax has not been collected as mentioned in the impugned order. Moreover it was also stated that the observation of the Commissioner that the appellant had collected the tax is not entirely correct in view of the fact that the provisions of Section 73A have not been invoked. Further it was also stated that appellant collected service tax excluding the salary portion and therefore the observations of the Commissioner could not have been correct. It was also submitted that in several cases the amount was not actually received - Tribunal while passing the order in the absence of the learned Chartered Accountant, probably missed certain important submissions. Moreover we also find that the financial difficulties explained by the appellants also have some validity. Most important part is the fact that the claim of the appellant they have not collected entire amount of service tax is required to be verified and the revised quantification based on the actual amounts received may have to be done. Since the appellant has paid nearly 1/3rd of the total amount payable, we consider that at this stage itself the matter should be remanded for fresh consideration by the original adjudicating authority so that the appellant s claim of the quantification can be correctly done and appellants also get another opportunity to defend their case properly and also another opportunity to adjudicating authority to pass a well reasoned order. - Modification done.

Summary

Issues:
1. Modification of order for depositing service tax amount.
2. Validity of appellant's grounds for non-payment.
3. Verification of service tax collection and quantification.
4. Remand for fresh adjudication by original authority.

Analysis:
1. The appellant sought modification of an order directing them to deposit a specific amount of service tax within a deadline, citing closure of business and financial crisis as reasons for non-compliance. The appellant explained the challenges faced, including cancellation of contracts, termination of employees, and utilization of funds for salary payments. Despite partial payment made, the appellant could not fulfill the entire amount due to financial constraints and loss of personal assets. The appellant contended that the department was aware of the situation, and there was no suppression of facts. The Tribunal considered the circumstances and remanded the matter for fresh adjudication by the original authority to verify the appellant's claims and allow a proper defense.

2. During the hearing, the appellant's Chartered Accountant requested an adjournment, indicating difficulties in attending due to misinformation about the proceedings. The appellant also disputed the Commissioner's assertion of full tax collection, highlighting discrepancies in the amount collected and received. The Tribunal acknowledged the need to verify the actual collection and quantification of the service tax, considering the appellant's assertions and financial challenges. Recognizing the validity of the appellant's claims and the importance of a fair assessment, the Tribunal decided to set aside the previous order and remand the case for a fresh review by the original adjudicating authority.

3. The Tribunal observed that the appellant's arguments regarding non-collection of the entire service tax amount, financial difficulties, and the need for accurate quantification had merit. Noting the appellant's partial payment and the necessity to reevaluate the case based on actual amounts received, the Tribunal deemed it appropriate to grant the appellant another opportunity to present their case effectively. By remanding the matter for a fresh adjudication, the Tribunal aimed to ensure a fair and reasoned decision by allowing the appellant and the adjudicating authority a chance to address the issues comprehensively.

4. In conclusion, the Tribunal allowed the appellant's miscellaneous application, recalled the stay order, set aside the previous decision, and remanded the case to the original adjudicating authority for a thorough reassessment. By providing the appellant with a fair opportunity to clarify their position and address the discrepancies in service tax collection, the Tribunal aimed to uphold the principles of justice and due process in the adjudication of the matter.