2017 (12) TMI 334 - AT - Service Tax

Demand of tax - cum tax benefit - the value of service shown in their profit and loss account was different that declared in their ST-3 return - Held that - the appellants have not paid service tax on the total taxable value declared by them in their ST-3 return and consequently a demand of ₹ 4,59,665/- has been confirmed. The appellant in their appeal memorandum have contended that they have already paid this amount vide TR 6 challan which they claimed to have attached to their ST 3 return. The appellant had claimed that they will produced the said evidence during the hearing before Tribunal however no such evidence have been produced. In these circumstances there is no option but to confirm the said demand. Extended period of limitation - Held that - The appellants have not disputed that the figure show in their ST-3 Return did not match with the figures shown in their balance sheet. In these circumstances invocation of extended period of limitation is justified. Simultaneous penalty u/s 76 and 78 - It has been argued that after 10.5.2008, when the act was amended, penalties under both these Section cannot be imposed simultaneously - Held that - The appellant in their grounds of appeal, have not given any reason why the same finding needs to be disturbed. Consequently imposition of penalty under Section 76 & 78 is upheld. Penalty u/s 77 - Held that - The appellants have not filed the S.T.3 returns in proper time and therefore penalties under Section 77 have rightly been imposed. The matter is remanded to the original adjudicating authority for redetermination of duty after granting cum tax benefit on receipt basis - appeal allowed in part and part matter on remand.

Summary

Issues:
Confirmation of demand of service tax and imposition of penalties under Section 75, 76, 77 & 78 of the Finance Act, 1994.

Analysis:

1. Confirmation of Demand and Imposition of Penalties:
The appeal was filed against the confirmation of demand of service tax and penalties under various sections of the Finance Act, 1994. The appellant, engaged in security services, was issued a show cause notice due to discrepancies in the value of services declared. The appellant argued that the demand amount was based on an erroneous interpretation of an agreement and that the Commissioner failed to consider their accounting policy. However, the Tribunal held that the tax liability is based on the amount received, not billed, and the appellant is entitled to cum duty value on a receipt basis. The demand was confirmed as the appellant failed to provide evidence of payment. Penalties under Sections 76 & 78 were imposed due to discrepancies in ST-3 returns and balance sheet figures, and the extended period of limitation was justified. The penalties under Section 77 were also upheld due to delayed filing of returns.

2. Remand and Redetermination:
The Tribunal set aside the impugned order and remanded the matter to the original adjudicating authority for redetermination of duty after granting cum tax benefit on a receipt basis. The penalties under Sections 76 & 78 were to be re-determined accordingly. The appeal was partly allowed by way of remand, emphasizing the importance of proper documentation and adherence to tax regulations.

In conclusion, the judgment focused on the correct interpretation of tax liabilities based on receipts, the importance of providing evidence of payment, and the imposition of penalties for non-compliance with tax regulations. The decision highlighted the need for accuracy in financial reporting and timely filing of returns to avoid penalties and ensure compliance with tax laws.