2009 (8) TMI 92 - AT - Service Tax

Service Tax Liability presentation in the balance sheet and in the st 3 return dredging service - demand for service tax of Rs. 17,85,101/- has been confirmed on the ground that in their balance sheet they had shown the amount for rendering services as receipts but they have failed to pay service tax on the said amount held that assessee contended that contrary to the observations of the Commissioner (Appeals), the practice followed is not adjustment of dues against each other but two are paid/received separately - Whatever is due from the appellants to M/s. Gujarat Adani Port Limited is paid and whatever is receivable is also received separately and no payments are made. He points out that on 07.4.2006 they had paid Rs. 1.40 Crores to M/s. Gujarat Adani Port Limited towards outstanding and payable by them to Gujarat Adani Port Limited ande on 09.4.2006 they had received Rs. 3.05 Crores towards services rendered by them. However, in the balance sheet both amounts are treated separately but for calculation of liability net amount is taken matter remanded.

Summary

Issues:
1. Demand for service tax on dredging services provided to Gujarat Adani Port Limited and others.
2. Imposition of penalties under various sections of Finance Act, 1994.

Analysis:
1. The appellants were engaged in providing dredging services to Gujarat Adani Port Limited, and a demand for service tax of Rs. 17,85,101/- was confirmed based on the balance sheet showing the amount for rendering services as receipts without paying service tax. Penalties were imposed under different sections of the Finance Act, 1994.

2. The Chartered Accountant representing the appellants argued that the balance sheet was prepared on an accrual basis, and the income shown was also on an accrual basis. Evidence in the form of a Chartered Accountant certificate and ledger copies were presented to support the claim that the service tax was paid correctly on the due date in May 2006.

3. The Commissioner (Appeals) noted that the appellants had shown Rs. 1,52,65,903/- as receivable, which was deducted from the gross amount receivable, supporting the department's contention regarding service tax liability. However, during the appeal hearing, the Chartered Accountant pointed out discrepancies in the treatment of dues and payments between the appellants and Gujarat Adani Port Limited. Payments and receipts were made separately, with no adjustments against each other. The lower authorities failed to examine this aspect, leading the Tribunal to set aside the Order in Appeal and remand the matter back to the Original Adjudicating Authority for a fresh decision after considering the appellants' submissions. The Tribunal clarified that no opinion was expressed on the correctness of the facts presented before them.