2008 (5) TMI 127 - AT - Service Tax

Allegation of short payment appellant s plea is that due to some software problem in the computer system, payment of tax during the period had either been made excess or less on the basis of monthly sub-ledger generated by their system - correctness of calculation computed by appelalnt is not supported by any documentary evidence since detailed reply made by appellant to SCN was not considered, matter is remanded to CCE to examine the documentary evidence for calculation of tax

Summary

Issues:
Service tax underpayment during a specific period, imposition of penalty under Section 76 of the Finance Act, 1994, software problem causing incorrect tax payments, failure to provide documentary evidence supporting tax calculation.

Analysis:

1. Service Tax Underpayment and Penalty Imposition:
The case involved allegations of underpayment of service tax during a specific period, leading to the Adjudicating Authority confirming the demand of tax and imposing a penalty equal to the amount under Section 76 of the Finance Act, 1994. The Appellants, registered with the Service Tax Authorities, provided various services. The Adjudicating Authority's decision was based on the findings during the audit of records, indicating the alleged underpayment.

2. Software Problem and Incorrect Tax Payments:
The Appellants, through their Advocate, contended that a software problem in their computer system resulted in incorrect tax payments during the period in question. The Advocate explained that the tax payments were either excess or less due to the monthly sub-ledger generated by their system. Additionally, the demand calculation included amounts received from other private operators for "Interconnect Usage Charges." The Advocate further mentioned that the Appellants had submitted a Statement of Accounts to the Adjudicating Authority to support their claims.

3. Lack of Documentary Evidence Supporting Tax Calculation:
Upon review, the Commissioner noted that the Appellant did not provide sufficient documentary evidence to support the reduction of service tax claimed. The Commissioner emphasized the importance of accurate calculation supported by proper documentation. The Appellants' Advocate highlighted that they had submitted a detailed statement in response to the Show Cause Notice, which was allegedly not considered by the Adjudicating Authority. Consequently, the Tribunal set aside the Adjudication Order and remanded the matter to the Commissioner of Central Excise for a thorough examination of the documentary evidence related to tax calculation.

In conclusion, the Tribunal allowed the appeal by way of remand, emphasizing the necessity for the Adjudicating Authority to review the documents provided by the Appellants and grant them a proper opportunity for a hearing. The decision highlighted the significance of supporting tax calculations with documentary evidence and ensuring a fair and thorough examination of the case before reaching a final judgment.