2008 (4) TMI 124 - AT - Service Tax

Rent-a-cab service also registered as tourist operator demand contested on ground of violation of principles of natural justice quantum of tax also challenged - No valid reason has been given for not filing any reply to SCN - submissions by assessee regarding violation of principles of natural justice are not prima facie sustainable stay partly granted

Summary

Issues: Violation of principles of natural justice, quantum of service tax, applicability of Section 11C notification, accrual basis vs. receipt basis for service tax, rate of tax at the time of rendering service, payment of service tax for previous years.

In this case, the Appellate Tribunal CESTAT New Delhi heard a stay petition filed by an appellant who owned 39 cabs and rented them out to clients, also registered as a tourist operator. The Commissioner had confirmed a service tax demand of Rs. 55,15,370/- along with penalties under various sections. The appellant challenged the Commissioner's order on grounds of violation of natural justice and other issues affecting the quantum of tax confirmed. The appellant argued that the balance sheet figures were on an accrual basis, while service tax is payable on receipt, and the rate of tax applied should be based on the time of service rendering. The appellant also highlighted a Section 11C notification granting a waiver of tax on 60% of the gross amount received by tour operators. Additionally, the appellant mentioned the payment of Rs. 14.08 lacs as service tax for previous years, which the Commissioner did not consider.

Upon consideration, the Tribunal found that the show cause notice had been served, and the appellant did not provide a valid reason for not filing a reply. The Tribunal noted that the appellant did not dispute liability for service tax but raised issues impacting the quantum of tax owed. The claim of having paid Rs. 14.08 lacs in previous years was deemed irrelevant as the demand related to a period up to 2003. Ultimately, the Tribunal directed the appellant to deposit Rs. 5,00,000/- within twelve weeks and report compliance by a specified date. Subject to this deposit, the balance tax amount was waived, and recovery stayed pending the final hearing of the appeal. The stay petition was disposed of accordingly.