2017 (9) TMI 269 - AT - Service Tax

Evasion of service tax - clandestine rendering of services - it was alleged that has collected the Service Tax from its clients but not deposited the same in the Government exchequer - duplicate invoices - Held that - When recipients are corporate entities, certainly they will have to make the payment through banking channel by showing in their books of account. The Department has not made any attempt to verify from their books of account that any payment was made other than the banking channel. From the record, it also appears that the parallel/duplicate invoices were the printed copies taken from the computer where they were found. There might be several copies printed by the concerned staff which were remained unsigned. When original invoice is available in computer and not duplicate copy, then no addition can be made on the basis of extra printed copy - we find no justification to demand the Service Tax on the basis of so called parallel/duplicate invoices and the same is hereby set aside. Unregistered office - Held that - the assessee-Appellants were registered in the name of M/s Varsed Detective and Security Pvt. Ltd. at Gurgaon and opened another office in Bhiwadi in the name of M/s Varsed Services, which is a component of the main company. M/s Varsed Services was doing the business activity in the name of the main company with the same registration number. So, there is no scope for escapism. From the record, it appears that M/s Varsed Services has not received any payment or order. Whatever orders or payments were received are accounted in the main company. Hence, the second company may be slightly different in nomenclature but can be considered as a branch unit, especially when no business was carried out in its name. The services provided to SEZ were exempted from payment of Service Tax under Section 93 of the Act by virtue of Notification No. 4/2004 dated 31.03.2004. The exemption was available to SEZ developers and the units in SEZ. In the instant case, the assessee-Appellants had not charged or collected any Service Tax from the SEZ, so the same was not paid. Cleaning services - Held that - assessee-Appellants were also providing cleaning services to Ajmer Fort at Jaipur which is an archaeological structure. The same cannot be considered as commercial or industrial unit. It was exempted from the clutches of the Service Tax as per the order supplied by the Archaeological Survey of India. In the instant case, it appears that the Commissioner has made addition to Service Tax demand on the basis of parallel/duplicate invoices which is not sustainable in the eyes of law. As stated above, the income was taken on accrued basis, but not on the actual basis. Regarding the SEZ services, it appears that for SEZ units, namely, DLF Kolkata; DLF IT Park, Hyderabad and DLF Rai Project, the assessee-Appellants have raised the invoices but when tax was not received the same was not paid. There is nothing on record to show that the assessee-Appellants received the Service Tax raised in the invoices. It may be mentioned that no Service Tax was charged during the period 2008 to 2010. The demand of Service Tax of ₹ 5,74,624/- in this regard is bad in law and the same is hereby set aside. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Alleged evasion of Service Tax by the assessee-Appellants.
2. Validity of the demand based on parallel/duplicate invoices.
3. Services provided in the State of J&K and SEZ Units.
4. Services related to horticulture and cleaning services.
5. Unregistered office operations.
6. Scope of show cause notice.

Detailed Analysis:

1. Alleged Evasion of Service Tax by the Assessee-Appellants:
The Department alleged that the assessee-Appellants were evading Service Tax by collecting it from clients but not depositing it with the Government. The assessee-Appellants argued that all payments were received through banking channels and reflected in their balance sheets and bank statements. The Tribunal found no evidence to support the Department's claim of cash payments and unaccounted services, especially since the recipients were corporate entities required to make payments through banking channels.

2. Validity of the Demand Based on Parallel/Duplicate Invoices:
The Department's investigation revealed the presence of parallel/duplicate invoices, suggesting unaccounted services. However, the Tribunal noted that these were merely extra printed copies from computers, and no original invoices were missing. The Tribunal found no justification for the demand based on these invoices, as the Department failed to verify payments from the recipients' books of accounts.

3. Services Provided in the State of J&K and SEZ Units:
The Tribunal confirmed that services provided in J&K are not subject to Service Tax due to the non-applicability of the Act in that region. Similarly, services provided to SEZ units were exempt under Section 93 of the Act by virtue of Notification No. 4/2004. The Tribunal found that the assessee-Appellants did not charge or collect Service Tax from SEZ units, and there was no evidence of Service Tax being received for these services.

4. Services Related to Horticulture and Cleaning Services:
The Tribunal observed that services related to horticulture, including maintenance of lawns, gardens, and grass, are exempt from Service Tax under Section 65(24b) read with Section 65(105)(zzzd) of the Finance Act, 1994. Additionally, cleaning services provided to Ajmer Fort, an archaeological structure, were also exempt as per the order supplied by the Archaeological Survey of India.

5. Unregistered Office Operations:
The Tribunal noted that the assessee-Appellants had an unregistered office in Bhiwadi operating under a different name but as a component of the main company. Since all orders and payments were accounted for by the main company, the Tribunal considered the unregistered office as a branch unit with no separate business activities.

6. Scope of Show Cause Notice:
The Tribunal emphasized that the show cause notice is the foundation of the case, and any demand or charge must be within its scope. The Tribunal found that the Department's claim regarding services provided to SEZ units without approval from the Approval Committee was beyond the scope of the show cause notice. Citing precedents, the Tribunal reiterated that the adjudicating authority cannot go beyond the scope of the show cause notice.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeal filed by the assessee-Appellants and rejecting the appeal filed by the Department. The Tribunal found no merit in the Department's claims and emphasized adherence to the scope of the show cause notice.

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