2017 (5) TMI 464 - AT - Service Tax

Taxability of reimbursements - taxability of consideration of sub-contractor - benefit of N/N. 02/2003 dated 1.3.2003, whether have retrospective effect or prospective effect? - situs of the provisions of service - whether the difference between the Annual Report and Service Tax return shall be taxable? - all the matter is remanded to the adjudicating authority to re-adjudicate the matter - appeal allowed by way of remand.

Summary

Issues:
1. Taxability of reimbursement of expenses
2. Taxability of consideration received by sub-contractor
3. Applicability of Notification No.21/2003-ST dated 20.11.2003
4. Situs of the provisions of service for taxability
5. Difference between Annual Report and Service Tax returns

Analysis:

1. Taxability of Reimbursement of Expenses:
The appellant sought an adjournment, citing the first hearing date, but multiple adjournments had already occurred. The Tribunal emphasized that seeking adjournments is not a litigant's right, following the Apex Court's stance. The matter of taxability of reimbursement of expenses was discussed, referencing previous decisions. The issue was remanded to the adjudicating authority pending the outcome of judgments by the Apex Court.

2. Taxability of Consideration Received by Sub-contractor:
The Tribunal noted that this issue is pending before the Hon'ble High Court of Bombay in a specific case. Therefore, the matter was also remanded to the adjudicating authority until the High Court's judgment is available for consideration.

3. Applicability of Notification No.21/2003-ST dated 20.11.2003:
The Commissioner had denied the benefit of a specific notification, questioning its retrospective or prospective effect. Citing legal precedent, the Tribunal stated that the grant of notification takes effect from its issuance date. The appellant was granted a fair opportunity for a hearing on this issue during re-adjudication.

4. Situs of the Provisions of Service for Taxability:
As the matter was remanded, the appellant was given the opportunity to present arguments on whether services were provided from India and to determine taxability accordingly.

5. Difference Between Annual Report and Service Tax Returns:
The Tribunal clarified that the adjudicating authority must assess if the differences between the Annual Report and Service Tax returns are related to service provisions for tax levy. If not, no tax should be imposed. The authority was directed to grant a reasonable hearing, record pleadings and evidence, and make an appropriate decision.

The Tribunal remanded the matter to the adjudicating authority for re-adjudication, emphasizing the need for an expedited process to protect the interest of justice due to a significant tax demand involved.