2014 (7) TMI 287 - AT - Service Tax

Valuation - Manpower supply services, outdoor catering and cleaning services - renting out machineries for providing services and consumables and those costs have not been included for the purpose of tax - Held that - The original authority as well as the Commissioner(Appeals) have stated that the appellants have produced ledger extract, sales register but these did not reflect the expenses of consumables and materials supplied. However, both the authorities are silent as to on what basis these amounts have been found to have been received by the appellants. If they are not reflected in the sales register and ledger extractand on what basis the service tax has been arrived at has to be indicated. In the absence of any indication what is the basis for the demand and whether it has been found that the amount has been collected and the amount has been included in the. It is extremely difficult to come to any conclusion. We have also gone through the orders passed by the lower authorities to the observation recording that sales register and ledger extract which show that sales register and ledger extract were provided but there is no observation as to how the amount has been worked out. There has to be some basis for raising the demand. There is also a mention of audit in the records but we find that from the audit notes submitted along with documents by the appellant, there is no mention of escapement of revenue on these grounds in the audit note also service tax - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
Service tax demand on manpower supply, outdoor catering, and cleaning services; Lack of basis for demand calculation; Absence of detailed explanation on expenses and materials supplied; Necessity for service-wise details; Remand for fresh adjudication.

Analysis:

Service Tax Demand:
The judgment addresses a total service tax demand of Rs. 2,95,390 on the appellant for providing manpower supply, outdoor catering, and cleaning services. The demand arose due to the alleged non-inclusion of costs related to rented machineries, consumables, and materials in the service tax calculation. Additionally, interest and penalties were imposed on the appellant.

Lack of Basis for Demand Calculation:
The appellant raised concerns regarding the lack of clarity in the show-cause notices issued separately for each service. They requested the basis for the demand calculation and the specific amounts demanded for each service, which were not provided by the lower authorities. The appellant emphasized that the demands covered the entire period and total amount received, based on their Sales Tax Return and ledger records.

Absence of Detailed Explanation on Expenses:
Upon reviewing the records, statements, ledger extracts, and sales receipts, the tribunal noted the absence of a clear explanation on how the demand was calculated. The lower authorities acknowledged the appellant's provision of ledger extracts and sales registers but failed to demonstrate how the amounts were determined. The tribunal highlighted the necessity for a transparent basis for the demand calculation, especially regarding expenses and materials supplied.

Necessity for Service-Wise Details:
The tribunal emphasized the importance of providing service-wise details to the appellants to understand the basis of the demand. It was noted that without a clear indication of how the amounts were determined and whether they were collected and included, reaching a conclusion was challenging. The tribunal stressed the need for a comprehensive explanation to support the demand.

Remand for Fresh Adjudication:
Considering the lack of clarity and detailed explanation in the original order, the tribunal decided to remand the matter to the original adjudicating authority for fresh adjudication. The tribunal waived the requirement of pre-deposit at this stage and instructed the lower authorities to reconsider the case, ensuring the appellant is given a reasonable opportunity to present their case and relevant documents.

In conclusion, the judgment highlights the necessity for a transparent and detailed explanation of the basis for service tax demands, especially in cases involving multiple services. The decision to remand the matter for fresh adjudication underscores the importance of providing clear service-wise details to support such demands.