2015 (12) TMI 156 - AT - Service Tax

Benefits of exemption Notification Nos.15/2004-ST and 18/2005-ST dated 10.9.2004 and 7.6.2005 - Failure to disclose the value of goods supplied free of cost by the service recipient to the assessee for incorporation into works executed by the assessee for the benefit of the recipients - Held that - Issue is squarely covered by the decision of the Larger Bench of this Tribunal in Bhayana Builders Pvt. Ltd. vs. C.S.T., New Delhi - 2013 (9) TMI 294 - CESTAT NEW DELHI (LB) . This is only the issue on the basis of which liability of the assessee to tax and interest, penalty was determined by the impugned adjudication order. - Decided in favour of assessee.

Summary

Issues:
Appeal against adjudication order confirming service tax demand based on failure to disclose value of goods supplied free of cost by service recipient for incorporation into works executed.

Analysis:
The judgment pertains to an appeal against an adjudication order passed by the Commissioner, Central Excise (Adjudication), New Delhi, confirming a service tax demand of Rs. 1,23,70,024/- along with interest. The order was based on the grounds that the appellant/assessee failed to disclose the value of goods supplied free of cost by the service recipient for incorporation into works executed by the assessee for the benefit of the recipients. The issue in question was whether the assessee was entitled to avail the benefits of exemption notifications 15/2004-ST and 18/2005-ST dated 10.9.2004 and 7.6.2005, respectively. The judgment highlights that this issue is squarely covered by the decision of the Larger Bench of the Tribunal in Bhayana Builders Pvt. Ltd. vs. C.S.T., New Delhi - 2013 (32) STR 49 (Tri-LB).

The judgment explicitly states that the liability of the assessee to tax, interest, and penalty was determined solely based on the failure to disclose the value of goods supplied free of cost. Consequently, the appeal was allowed, and the impugned order dated 23.3.2009 passed by the Commissioner of Central Excise (Adjudication), New Delhi was quashed. The appellant was granted entitlement to a refund of the amount deposited pursuant to the proceedings that led to the impugned order, subject to verification of unjust enrichment, if any. The decision emphasizes the importance of complying with disclosure requirements to avail exemptions and the significance of judicial precedents in resolving tax liabilities.

This judgment underscores the critical role of proper disclosure in tax matters and the repercussions of non-disclosure on availing exemptions. It also highlights the reliance on judicial precedents to determine tax liabilities and the authority of appellate tribunals in overturning adjudication orders based on non-compliance with disclosure obligations. The judgment serves as a reminder to taxpayers about the importance of transparency and accurate reporting to avoid tax disputes and emphasizes the need for thorough verification processes in refund cases to prevent unjust enrichment.