2018 (9) TMI 1988 - AT - Service Tax

Demand of differential amount of service tax alongwith interest and penalty - allegation of discrepancies in figures as per financial records with that of figures mentioned in ST-3 Returns for the period from April, 2007 to March, 2011 - HELD THAT - It is noticed from the reconciliation statement submitted that some amount of money received towards booking, was subsequently refunded to the parties on account of cancellation of booking. In many cases, service tax has not been collected separately and hence, the appellants have prayed for allowing cum tax benefit as envisaged in Section 67 (2). In the case of Advantage Media Consultant 2008 (3) TMI 59 - CESTAT KOLKATA , the Tribunal has held that the total amount collected for the provision of services, should be treated as inclusive of service tax to be paid. When no tax is included separately, the gross amount has to be adopted to qualify the tax liability treating it as value of the taxable service plus service tax payable. Penalty - HELD THAT - There are no ingredient of suppression, mis-statement etc. with intent to evade payment of service tax. The facts in respect of activities undertaken by the appellants are same as mentioned in the show-cause notice, which was issued after a gap of nearly four years and the Department has not rebutted the calculation submitted by the appellant. Accordingly, penalty imposed under Section 78 is set aside. The discrepancies as mentioned in the reconciliation statement filed by the appellant as reproduced above being factually apparent from the record, needs to be rectified and demand should be taken as cum-tax and should be re-quantified accordingly. For this limited purpose, the matter is remanded to the adjudicating authority - Appeal allowed by way of remand.

Summary

Issues: Alleged discrepancies in service tax payment and calculation

Analysis:
1. The case involved an appeal by Science City, a constituent unit of the National Council of Science Museums, against a show-cause notice alleging discrepancies in service tax payment for the period from April 2007 to March 2011.

2. The appellant argued that they had complied with statutory provisions and submitted necessary details to explain the alleged discrepancies. They contended that the show-cause notice lacked calculation sheets and only mentioned differences in taxable values without proper explanation.

3. The appellant claimed to have paid tax in excess of the demanded amount due to refunds issued for booking cancellations and contract foreclosures. They argued that service tax liability should be based on the gross amount received and should include tax payable by the ultimate customer unless separately calculated.

4. The Tribunal noted that the appellant had been compliant in paying service tax and filing returns. It acknowledged the reconciliation statement showing refunds issued for booking cancellations and emphasized the need to consider the total amount collected for services as inclusive of service tax when not separately stated.

5. The Tribunal found no evidence of suppression or misstatement to evade tax payment. It observed that the show-cause notice was issued after a significant delay, and the Department did not challenge the appellant's calculations. As a result, the penalty under Section 78 was set aside.

6. Considering the factual discrepancies highlighted in the reconciliation statement, the Tribunal remanded the matter to the adjudicating authority to rectify the demand calculation and treat it as cum-tax. The appeal was allowed for this purpose, directing the re-quantification of the demand accordingly.

This detailed analysis of the judgment addresses the issues of alleged discrepancies in service tax payment and calculation, outlining the arguments presented by the appellant, the Tribunal's findings, and the final decision to remand the matter for re-quantification of the demand.