2016 (12) TMI 1130 - AT - Service Tax

Discharge of tax - security agency service - cleaning services - whether Respondent herein has correctly discharged service tax liability? - Held that - It is observed that short levy is only due to calculation / quantification errors. Secondly, providing of cleaning services to Assam University & Kendriya Vidyalayas (KVS) has been held to be non taxable by the first appellate authority against which Revenue is not in appeal. Further Respondent has made out a point that many other entries in Annexure-A to the show cause notice dt 20/4/09 also pertain to cleaning services on which no service tax levy is attracted. As the matter pertains to re-quantification of service tax, it is required that appellant should produce a cost accountant s certificate to the Adjudicating authority to demonstrate as to what is the extent of exempted services (cleaning services) allowed - appeal allowed by way of remand.

Issues Involved:
1. Correct discharge of service tax liability by the Respondent.
2. Imposition of penalties under Sec 76 & 78 of the Finance Act 1994.
3. Applicability of Sec 80 of the Finance Act 1994.

Analysis:

Issue 1: Correct discharge of service tax liability
The appeal was filed by the Revenue against the order passed by the first appellate authority setting aside the penalties under Sec 76 & 78 of the Finance Act 1994 and calculating the differential tax liability to be only &8377; 9,43,354. The Revenue argued that the Respondent was providing 'Security Agency' and clearing services, but was registered only under 'Security Agency Services' and had paid service tax at a much lesser value. It was contended that for clearing services, no registration was obtained at all. The first appellate authority allowed a deduction of &8377; 18,21,650 as the value of cleaning services on which no service tax is leviable. The Respondent's representatives argued that the value of cleaning services provided was much more than &8377; 10 lakh and that they were under the belief that cleaning services were not taxable. The Tribunal observed that the main issue was whether the Respondent correctly discharged the service tax liability, especially concerning the cleaning services provided to certain entities. The Tribunal remanded the case to the Adjudicating authority for re-quantification of service tax after the production of a cost accountant's certificate.

Issue 2: Imposition of penalties under Sec 76 & 78
The issue of imposition of penalties under Sec 76 & 78 of the Finance Act 1994 was also raised in the appeal. The Respondent argued that penalties should be waived under Sec 80 of the Finance Act 1994 due to a genuine belief that cleaning services were not taxable. The Tribunal kept this issue open for the Adjudicating authority to deliberate upon during the remand proceedings. The decision on the imposition of penalties was deferred pending further examination by the Adjudicating authority.

Issue 3: Applicability of Sec 80 of the Finance Act 1994
The Respondent contended that penalties could be waived under Sec 80 of the Finance Act 1994 due to a genuine belief that cleaning services were not taxable. The Tribunal decided to keep this issue open for further examination by the Adjudicating authority during the remand proceedings. The applicability of Sec 80 was to be determined based on the facts and circumstances presented during the re-quantification of service tax liability.

In conclusion, the Tribunal allowed the appeal filed by the Revenue by remanding the case to the Adjudicating authority for re-quantification of service tax liability and further examination of the issues related to penalties under Sec 76 & 78 and the applicability of Sec 80 of the Finance Act 1994.

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