2018 (1) TMI 1628 - AT - Service Tax

Scope of agreements - memorandum of understanding was different - agreement for underwriting commission - HELD THAT - In the instance case the main controversy is pertaining to the agreement between the service provider and service recipient. It is the allegation that in the memorandum of understanding, the scope has been enhanced and the new document has been given at the time of adjudication. The contention of the department is that both the agreements has different contents. When it is so, the impugned order is set aside and matter remanded to the original authority to verify the genuineness of the agreement and decided the issue denovo but by providing an opportunity of hearing to the respondent. Appeal allowed by way of remand.

Summary

Issues:
1. Interpretation of service tax liability on underwriting commission.
2. Validity and authenticity of agreements between service provider and recipient.
3. Scope enhancement in memorandum of understanding.

Analysis:
The appeal before the Appellate Tribunal CESTAT, New Delhi involved the department challenging an order-in-original passed by the Commissioner, Service tax, New Delhi regarding service tax liability on underwriting commission for the year 2006-07. The respondent-assessee had engaged a company for the issuance and sale of equity securities, leading to a service tax demand on the commission paid. The department claimed the reverse charge mechanism applied, but the Commissioner disagreed, stating underwriting services did not fall under banking and financial services. The Tribunal noted the disagreement primarily centered around the agreement between the parties. The appellant argued discrepancies in the documents submitted, emphasizing the unsigned agreement and an alleged enlargement of scope in a new document presented during adjudication. The respondent, however, contended that both documents were provided during investigation, albeit with the agreement being unsigned. The Tribunal acknowledged the differing contents of the agreements and decided to remand the matter to the original authority for a fresh assessment, emphasizing the need for verifying the genuineness of the agreement and allowing the respondent an opportunity to be heard. The Tribunal allowed the appeal by the Revenue, leading to the matter being remanded for further proceedings, with provisions for admitting fresh evidence if necessary.

In conclusion, the Tribunal's decision highlighted the importance of the agreement between the service provider and recipient in determining service tax liability, emphasizing the need for authenticity and consistency in the documents submitted. The case underscored the significance of providing a fair opportunity for both parties to present their case and the authority's duty to conduct a thorough assessment based on verified evidence. The remand order aimed at ensuring a comprehensive review of the agreements and a fair decision-making process, reflecting the Tribunal's commitment to upholding procedural fairness and adherence to legal principles in tax matters.