2017 (10) TMI 1121 - AT - Service Tax

Classification of services - Commercial & Industrial Construction Services or Work Contract services - the department was of the view that the Appellant had provided services to their clients/customers in respect of execution of a particular work under work contract - principles of natural justice - Held that - As the impugned order is ex-parte, and appellant had sought time by filling representation and no opportunity was allowed to file written submission and evidence - there is Violation of Principle of Natural Justice - Also law on works contract stands clarified subsequently - matter remanded with direction to the Adjudicating authority to pass a reasoned order, after hearing the Appellant - appeal allowed by way of remand.

Issues:
1. Failure to issue invoices for taxable services provided.
2. Discrepancies in service tax payments.
3. Alleged non-disclosure of amounts in ST-3 returns.
4. Variation in rates of service tax payments.
5. Compliance with composition scheme for payment of service tax.
6. Nature of services provided under work contract.
7. Violation of Principle of Natural Justice in the impugned order.

Analysis:
1. The Appellant, a partnership firm, failed to issue invoices for taxable services provided, leading to observations by Central Excise and Service Tax officers regarding services provided to various clients without proper documentation as required under Rule 4A of Service Tax Rules, 1994.

2. Discrepancies were found in the service tax payments made by the Appellant, with some amounts not subjected to service tax. The Appellant claimed non-taxable services for certain amounts received, but the department contended that these amounts were not disclosed in ST-3 returns, leading to an investigation into the payment sheets and service tax details.

3. The Appellant's registration as a service tax assessee in 2005 raised concerns as they only started paying service tax from July 2007 onwards. The department questioned the non-disclosure of certain amounts in returns and the variation in service tax rates paid by the Appellant over different financial years.

4. The department noted discrepancies in the rates of service tax payments by the Appellant and sought clarification on the variation. The Appellant explained that service tax was paid based on receipts from service recipients, citing applicable rates for the services provided.

5. Compliance with the composition scheme for payment of service tax was questioned by the department, alleging that the Appellant did not consistently follow the scheme and did not pay service tax on the gross amount received, as required under the notification.

6. The nature of services provided by the Appellant under work contract was scrutinized, with the department asserting that the services fell under "Work Contract Service" rather than "construction services." Allegations were made regarding the Appellant's failure to adhere to the composition scheme and pay service tax on the gross amount received.

7. The judgment highlighted a violation of the Principle of Natural Justice due to the ex-parte nature of the order, emphasizing the need for the Appellant to be given an opportunity to present their case. The Tribunal directed a remand to the Adjudicating authority for a reasoned order after hearing the Appellant, allowing the appeal by way of remand.

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