2018 (6) TMI 1215 - AT - Service Tax

Validity of SCN - First appellate authority has simply proceeded on the premise that the demand was based on the assumptions and presumptions and no serious efforts appears to have been made to reconcile the figures in the SCNs and the documentation of the respondent - Held that - Ld. Commissioner (Appeals) has given no findings on the reconciliation aspect. During the hearing, the Ld. Advocate argued that the receipts in the balance sheets were entirely from another advertising agency having service tax registration and not from the advertiser - Though the Ld. Commissioner (Appeals) has dealt with the legal aspect of this issue but did not make any attempt to reconcile the total receipts from this agency or any other advertising agency with the figures mentioned in the SCN and its annexures. The figures in the books of accounts and the ST-3 returns require proper reconciliation and the same requires to be done at the level of the adjudicating authority. The matter requires to be remanded back to the adjudicating authority to reexamine the documentations and the submissions of the respondents explaining the receipts in their ledger and books of accounts and to reconcile the same with the returns filed by the Respondent - appeal allowed by way of remand.

Summary

Issues:
1. Discrepancy in bank/cash receipts and declared receipts in ST-3 returns.
2. Non-payment of service tax on receipts shown in bank/cash ledger.
3. Demands raised through SCNs.
4. Appeal before Commissioner (Appeals) and subsequent appeal by Revenue.
5. Merits of contentions not fully discussed by Commissioner (Appeals).
6. Calculation errors in duty liability.
7. Reconciliation of figures in SCNs and documentation.
8. Reconciliation of total receipts with figures in SCNs.
9. Need for proper reconciliation at adjudicating authority level.
10. Remand for comprehensive reconciliation exercise.

Analysis:
1. The case involved discrepancies in bank/cash receipts compared to declared receipts in ST-3 returns, leading to non-payment of service tax on certain receipts. Two show cause notices (SCNs) were issued demanding duty along with penalties. The Commissioner (Appeals) set aside both demands, prompting the Revenue to file appeals.

2. The Revenue contended that the Commissioner (Appeals) did not fully discuss the merits of the appellants' contentions and made errors in calculating duty liability. The Commissioner (Appeals) dropped the demand without proper reconciliation, leading to the appeal for remand.

3. The appellant argued that entries in dispute were reconciled and discrepancies were based on serial numbers, not as per the Department's letter. They provided details of receipts, service tax payments, and evidence showing receipts from another advertising agency. The appellant cited relevant case laws in support.

4. The Tribunal observed that the Commissioner (Appeals) did not reconcile figures in SCNs with documentation. The appellant's explanation regarding receipts from another agency was noted, but proper reconciliation was lacking. The Tribunal directed a remand for comprehensive reconciliation between books of accounts, ledgers, and ST-3 returns.

5. The Tribunal allowed the appeals by way of remand, emphasizing the need for a thorough reconciliation exercise at the adjudicating authority level. The Commissioner (Appeals) was instructed to justify any quantified demand based on reconciled figures. The decision highlighted the importance of proper reconciliation in tax matters.