2014 (7) TMI 448 - AT - Service Tax

Demand of service tax - rent a cab service - Suppression of income - whether the excess income reflected by the appellant in their balance sheet or in the income tax returns is relatable to his activity of rent a cab or not - Held that - no evidence adduced by the appellant showing that the excess income was being earned by the party by suppressing the value of rent a cab services, we prima facie agree with the appellant that they have a strong case - Commissioner (Appeals) has rejected their legal issue of even rent a cab service not being a taxable service on the ground that it has been raised for the first time before him and is hit by the provision of Rule 5. On going through the said rules, we find that the same relate to production of additional evidence for the first time before Commissioner (Appeals) and not to the legal issues raised before him. Such legal issues can be raised before the appellate authorities and are required to be decided by him. - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Alleged suppression of income leading to evasion of service tax by a provider of rent a cab services.
2. Dispute regarding excess income shown in balance sheet and income tax returns in relation to rent a cab service.
3. Applicability of service tax on rent a cab services operated on a per kilometer basis.
4. Admissibility of legal issues raised before the Commissioner (Appeals) for the first time.

Analysis:

1. The case involved allegations of income suppression by a rent a cab service provider, leading to service tax evasion. The Revenue contended that the appellant had concealed income generated from rent a cab services based on scrutiny of financial documents, resulting in the initiation of proceedings and imposition of penalties.

2. The appellant argued that the excess income shown in their balance sheet and income tax returns was not solely from rent a cab services but also from other businesses. They contended that even if the excess income was related to rent a cab service, they should not be liable for service tax as they operated on a per kilometer basis, which might exempt them from the definition of rent a cab service.

3. The Commissioner (Appeals) dismissed the appellant's legal issue on the grounds of being raised for the first time, citing Rule 5 of the Central Excise (Appeals) Rules, 2001. However, the Tribunal found that Rule 5 pertained to additional evidence and not legal issues. The Tribunal acknowledged the appellant's argument that the excess income was not proven to be from suppressing rent a cab service values, indicating a lack of evidence by the Revenue.

4. The Tribunal disagreed with the Commissioner (Appeals) and set aside the impugned order, remanding the matter for a decision on merits. The Tribunal directed the Commissioner (Appeals) to consider all evidence, including the legal issue raised by the appellant, emphasizing that legal issues could be raised before appellate authorities and required due consideration.

In conclusion, the Tribunal's decision focused on the lack of evidence supporting the Revenue's allegations of income suppression for service tax evasion by the rent a cab service provider. The Tribunal emphasized the need for a thorough examination of all evidence and legal issues raised by the appellant, ensuring a fair and comprehensive decision on the matter.