2017 (4) TMI 282 - AT - Service Tax

Deduction - Services provided to SEZ - Other income like dividends, interest etc. - Service Tax on job-work done - Purchase of stationery, etc. - whether the cum-tax benefits allowed in respect of above services justified or not? - Held that - it is settled law that no service tax liability arises in respect of services provided to SEZ units or SEZ unit developers, hence there is no merits in the revenue s appeal on this point. We also note that the reimbursable amount sought to be taxed by revenue are in fact actual cost of stationery etc., hence adjudicating authority was correct in dropping demands on this count. As regards service tax liability on job-work involved, it is the claim of the learned counsel for the respondent that they have already discharged service tax liability. This particular point needs further clarification - the adjudicating authority needs to reconsider the issue in respect of the cum-tax benefit claimed, as also the job-work issue - appeal allowed by way of remand.

Summary

Issues:
Challenge by the department regarding deductions given by the adjudicating authority in the impugned order.

Analysis:
The appeal was filed by the Revenue against the Order-in-Original passed by the Commissioner of Central Excise, Pune I. The main issue in this case revolved around the challenge by the department concerning the deductions granted by the adjudicating authority. The Revenue contended that the deductions were not properly considered by the adjudicating authority. Specifically, the Revenue disputed deductions related to services provided to SEZ, other income like dividends and interest, service tax on job-work done, and purchase of stationery, among other items.

The Revenue argued that the taxable service value related to SEZ was not exempt from service tax, as the assesse was required to pay service tax and then claim a refund. Additionally, the Revenue raised concerns about the service tax liability on job-work invoices and the purchase of various items, highlighting a lack of clarity on whether these expenses were additional considerations or actual reimbursements. The Revenue also pointed out discrepancies in the sales register and disputed the cum-tax benefit claimed by the assessee.

Conversely, the respondent's advocate contended that the deductions allowed by the Commissioner were justified. The advocate emphasized that the sales register, being part of the books of accounts, did not require a chartered accountant's signature for authenticity. The respondent maintained that the service tax liability on job-work had already been settled.

After considering the arguments from both sides, the Tribunal found that the issue required reconsideration, particularly regarding the cum-tax benefits extended by the adjudicating authority. The Tribunal ruled in favor of the respondent on certain aspects, such as services provided to SEZ units and reimbursements for stationary expenses, stating that no service tax liability arose in these instances. However, further clarification was deemed necessary regarding the service tax liability on job-work.

Ultimately, the Tribunal directed the adjudicating authority to reassess the cum-tax benefit and job-work issue, taking into account the submissions made by the respondent's counsel. The penalties and interest liabilities were also instructed to be re-evaluated accordingly. The appeal was disposed of with these directions.