2017 (2) TMI 967 - AT - Service Tax

Construction service - Commission - sale/purchase of flats/plot of different builders - There were some delay in deposit of the taxes and the same was deposited by the appellant along with interest from time to time - Held that - there is no case of short payment of tax payable and/or under importing of tax payable in the returns filed by the appellant-assessee - no penalty is imposable under the provisions of Section 76, 77, 78 of the Act - matter remanded to the Adjudicating Authority only for the limited purpose of reconciliation of the taxes paid and the verification of amounts found to be admissible by this Tribunal - appeal allowed by way of remand.

Summary

Issues:
1. Service tax demand and penalty imposed under Sections 76, 77 & 78 of the Finance Act.
2. Discrepancies in tax calculation and Cenvat credit denial.
3. Applicability of penalties under different sections.
4. Reconciliation of taxes paid and verification of amounts.

Analysis:

1. The appeals arose from an Order-in-Original demanding service tax of ?1,65,39,989 along with interest and a composite penalty under Sections 76, 77 & 78 of the Finance Act. The appellant contested the demand and penalty, while the Revenue appealed against the penalty imposition method.

2. The Revenue alleged that the appellant had short paid service tax by misclassifying their services under construction instead of real estate agent services. The appellant argued that they had been collecting and depositing service tax regularly, with delays in payments rectified along with interest. Discrepancies in tax calculations were highlighted, including denial of Cenvat credit and errors in tax calculations for specific periods.

3. The Tribunal found no evidence of short payment of taxes by the appellant and set aside the impugned order. It was held that no penalties under Sections 76, 77, 78 of the Act were applicable. The matter was remanded to the Adjudicating Authority for reconciling taxes paid, verifying admissible amounts, and allowing any necessary adjustments or refunds to the appellant.

4. The Adjudicating Authority was directed to verify challans, calculate net tax payable, and refund any excess amounts to the appellant. The appellant was instructed to appear before the authority within 45 days to seek a hearing. The appeal of the appellant was allowed with specific directions, and the Revenue's appeal was dismissed.