2018 (1) TMI 373 - AT - Service Tax

Recovery of liability - security service provider - Rule 6(2) of the STR, 1994 - Held that - Revenue and appellant shall draw a proper schedule in the presence of Chief Commissioner of Service Tax, who shall be a monitoring authority for execution of this order. He shall nominate representative for Revenue to undertake reconciliation of facts and figures with the representative of appellant with due verification of payment particulars - Year wise liability following rule 6(2) of Service Tax Rules, 1994 shall be ascertained - matter on remand.

Summary

Issues:
1. Recovery of tax liability following a system other than cash system of accounting before 1.4.2011.
2. Liability of a security service provider under Rule 6(2) of the Service Tax Rules, 1994.
3. Lack of evidence to ascertain liability and failure to recover the liability fully.

Analysis:
1. The appellant contends that there was no provision under the Finance Act, 1994 before 1.4.2011 for recovery of the liability using a system other than the cash system of accounting. However, the Revenue argues that the law applicable before the said date should govern the recovery of tax liabilities. This disagreement forms the crux of the first issue.

2. The appellant, a security service provider, claims that it is a taxable service provider since 16.10.1998. The liability arising from the provision of such services before 2011 was required to be discharged under Rule 6(2) of the Service Tax Rules, 1994. The appellant asserts that it has fulfilled its liability under Rule 6(2) by making payments following the calendar month in which the consideration for the services was received. Conversely, the Revenue alleges that the appellant failed to provide evidence regarding the gross value of taxable services received and receivable. The appellant cites the loss of documents due to a flood as the reason for not presenting the evidence before the authority. This issue revolves around the interpretation and application of Rule 6(2) in determining the liability.

3. The third issue concerns the lack of material evidence provided by the appellant to ascertain its liability in accordance with the law. The Revenue claims that due to the absence of evidence, the liability has not been fully recovered. The Tribunal, after hearing both sides and examining the records, directs a process to reduce the dispute and ascertain the liability without further delay. This process involves collaboration between the Revenue, appellant, and the Chief Commissioner of Service Tax to reconcile facts, ascertain liabilities, and submit a report to the Tribunal for further action.

In conclusion, the judgment addresses the disputes regarding the recovery of tax liabilities, the application of Rule 6(2) of the Service Tax Rules, 1994, and the lack of evidence to ascertain and recover the liabilities fully. The Tribunal's directive aims to streamline the process, ensure cooperation between the parties, and facilitate the resolution of the issues at hand.