2018 (4) TMI 1334 - AT - Service Tax

Management, Maintenance and Repair Service - non-payment of service tax - benefit of reduced penalty - Held that - though the Appellant have been disputing the computation of service tax but no evidence was produced by them before the said authority to show any anomaly in demand - the demand has been correctly made from them. Therefore we uphold the service tax demand. However, the major demand amount already stands paid by them - the Appellant is entitled to pay reduced penalty of 25% imposed upon them under section 78 - if the remaining service tax demand and 25% penalty is paid by them within 30 days of the receipt of this order, they shall be liable only for 25% penalty imposed upon them u/s 78 and the remaining amount of penalties shall stand waived. Appeal allowed in part.

Summary

Issues:
1. Service tax demand based on balance sheet and bank statements.
2. Calculation errors in service tax demand.
3. Eligibility for small scale exemption.
4. Justification for variation in data.
5. Evidence produced to dispute service tax demand.
6. Reduction of penalty under section 78.

Analysis:
1. The Appellant, registered under service tax for "Management, Maintenance and Repair Service," received a show cause notice alleging non-payment of service tax amounting to ?42,28,754 for the period 2007-08 to 2011-12 based on a comparison of balance sheet and bank statements. The demand was confirmed by the adjudicating authority and upheld by the Appellate Commissioner, leading to the present appeal by the Appellant.

2. The Appellant's advocate argued that the demand was calculated using bank statements and invoices, resulting in an excess demand due to errors in tax rates. It was highlighted that the Appellant was eligible for small scale exemption in four out of the five years under review. The advocate contended that the demand lacked a proper basis, emphasizing discrepancies in the data used for calculation. The Appellate Authority's rejection of their contentions was challenged, citing discrepancies in taxable values and the Appellant's compliance with filing returns.

3. The revenue, represented by the Assistant Commissioner, supported the impugned order, stating that the Appellant failed to provide justification for the discrepancies between bank statements and invoices. The lack of contrary evidence and documentary support from the Appellant led to the confirmation of the demand.

4. Upon review, the Tribunal noted the Appellant's dispute regarding the service tax computation but found a lack of evidence presented to demonstrate any anomalies in the demand calculation. The Tribunal upheld the service tax demand but acknowledged that a significant portion of the demand had already been paid. Citing a Supreme Court decision, the Tribunal allowed the Appellant to pay a reduced penalty of 25% under section 78 if the remaining service tax demand and penalty were paid within 30 days, resulting in the waiver of the remaining penalties. The impugned order was modified accordingly, and the appeal was partly allowed.