2018 (4) TMI 616 - AT - Service Tax

Demand of service tax - Valuation - Cable Operator s Services - the Appellant is aggrieved with the impugned order on the ground that the copy of verification report relied upon by the Commissioner (Appeals) was not given to them in order to bring their version to defend their case - principles of Natural Justice - Held that - the Appellant were given ample opportunities to defend their case. The Appellant being a cable operator had provided the taxable services and collected fess/amounts from the input holders, therefore they were liable to pay Service Tax on the entire amount received as the taxable value which is the gross amount charged by the Appellant to input holders - Appellant cannot exclude the amounts received for maintenance charges from taxable value in view the Sub-Rule 1 of Rule 5 of Valuation Rules, which provides that where certain expenditure or costs are incurred by the service provider in the course of providing any taxable service, all such expenditure or costs shall be treated as consideration for the taxable services provided or to be provided and shall be included in the value for purpose of charging of service tax. No fault can be found with the order passed by the Commissioner (Appeals) and no interference is required - appeal dismissed - decided against appellant.

Summary

Issues:
1. Demand of service tax on cable services provided by the appellant.
2. Allegations of falsified accounts and non-payment of service tax.

Analysis:
1. The case involved the Appellant, a cable operator, providing services to input holders and clients. The Appellant received input signals from a Multi System Operator (MSO) and distributed them to their clients, collecting charges for the services provided. The issue arose when the Appellant was issued a show cause notice for not paying service tax on the amounts received from input holders and maintenance charges from the MSO. The demand was confirmed by the Commissioner (Appeals), leading to an appeal by the Appellant.

2. The Appellant contended that the demand was wrongly confirmed as they were not provided with a copy of the report on which the decision was based. They argued that the report was incomplete and that they were not given the opportunity to defend themselves adequately. The Appellant also disputed receiving maintenance charges from the MSO and providing services to alleged input holders. Additionally, they claimed that the revenue relied on payments made by them rather than amounts received, and the small-scale exemption was not considered.

3. The revenue, represented by the Assistant Commissioner, supported the findings of the impugned order, emphasizing the grounds on which the demands were confirmed. The Commissioner (Appeals) upheld the demand based on various documents, including bank statements and agreements, showing payments made by the Appellant to the MSO. The Commissioner found discrepancies in the Appellant's profit and loss accounts, concluding that the Appellant had falsified their accounts. The Commissioner also highlighted that the Appellant provided cable services to input holders and received amounts from them, making them liable to pay service tax on the entire amount received.

4. The Tribunal, after considering the arguments and findings, upheld the impugned order, rejecting the appeals made by the Appellant. The Tribunal agreed with the Commissioner (Appeals) that the Appellant had provided taxable services and collected fees from input holders, making them liable to pay service tax on the gross amount charged. The Tribunal found no fault with the Commissioner's order and deemed no interference necessary, thereby affirming the demand of service tax on the cable services provided by the Appellant and dismissing the appeals.