2016 (12) TMI 1474 - AT - Service Tax

False VCES declaration - rejection due to difference of taxable value taken by the department and as claimed by the appellant for calculation of service tax dues - demand - Held that - I find that as per the submissions made by the Ld. Advocate as reproduced above and the findings of the Ld. Commissioner there are variations in the stand taken by both sides. In my view, the appellant should be given an opportunity to explain their case regarding quantification as observed by the adjudicating authority viz-a-viz claimed by the appellant. I therefore of the view that matter needs to be remanded to the original adjudicating authority - appeal allowed by way of remand.

Issues Involved:
1. Validity of VCES declaration.
2. Taxability of advances received post-completion certificate.
3. Treatment of cancelled bookings and returned advances.
4. Taxability of advances received prior to the service tax levy.
5. Classification of unsecured loans as taxable service.

Detailed Analysis:

1. Validity of VCES Declaration:
The Commissioner held that the VCES declaration dated 25.12.2013 was "substantially false." Consequently, the demand of ?2,68,701/- was confirmed under Section 111(1) of the Finance Act, 2013 read with Section 73 of the Finance Act, 1994. Interest and penalties were also imposed.

2. Taxability of Advances Received Post-Completion Certificate:
The Commissioner observed discrepancies in the amounts claimed by the appellant as advances received after the completion certificate dated 10.10.2012. The appellant claimed ?53,00,000/-, while the balance sheet reflected only ?27,08,000/-. The Commissioner did not dispute the completion certificate's validity but found the appellant's claim unsubstantiated due to lack of supporting documents.

3. Treatment of Cancelled Bookings and Returned Advances:
The Commissioner noted that the appellant claimed to have returned ?32,00,000/- in advances to clients, but found inconsistencies in the evidence provided. Specifically, the Commissioner found it implausible that payments to different clients were made through a single cheque. The appellant provided bank statements and demand drafts as evidence, arguing that the returns were legitimate and should not be part of the taxable value.

4. Taxability of Advances Received Prior to Service Tax Levy:
The appellant argued that ?1,25,000/- received before 01.07.2010 was not taxable under Notification No. 36/2010-ST dated 28.06.2010. The Commissioner did not dispute the non-taxability but stated that the appellant failed to provide evidence to support the claim. The appellant later submitted date-wise receipt details from the registered agreement to substantiate that the amount was received on 01.04.2010.

5. Classification of Unsecured Loans as Taxable Service:
The appellant contended that ?15,00,000/- received as unsecured loans from friends and relatives was incorrectly booked under "Row House Advance booking." The Commissioner rejected this claim due to a lack of supporting documents such as a Chartered Accountant's certificate or relevant income tax returns. The appellant provided declarations from the relevant parties and a Chartered Accountant's certificate to support their claim that the amount was indeed an unsecured loan.

Conclusion:
Upon reviewing the submissions and findings, the Tribunal found discrepancies between the appellant's claims and the adjudicating authority's observations. It was decided that the appellant should be given an opportunity to explain their case regarding the quantification of the amounts. The matter was remanded to the original adjudicating authority for a fresh order, with all issues kept open for reconsideration. The appeal was allowed by way of remand, ensuring the appellant would have the opportunity for a hearing and to submit required documents.

Pronouncement:
The judgment was pronounced in court on 15/07/2016.

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