2018 (6) TMI 1364 - AT - Service Tax

Liability of Service Tax - airport service before 01.07.2010 - scope of SCN - remand of the case - Penalties u/s 77 and 78 - Held that - It is not in dispute that appellant had not discharged the full service tax liability by not disclosing the full value of the services rendered by them in their ST- 3 returns. It is only the investigation of the department which revealed the true value. There is no reason to agree with the Counsel for the appellant that this case should be remanded back to the original authority. The appellant has not correctly reflected the value of the services rendered by them in their ST-3 returns or paid service tax thereon. When the return has to be filed by the appellant, it is expected that they reflect the correct figures in the returns and not by doing so, they have suppressed the value of the services and thereby evaded payment of service tax. Therefore, penalty is imposable under section 78 of the Finance Act, 1994 for not payment of service tax - Penalty is also correctly imposed under section 77 of the Finance Act, 1994. Appeal dismissed - decided against appellant.

Summary

Issues involved:
Interpretation of service tax liability for ground handling services provided to airlines at airports, calculation of tax liability based on gross receipts, imposition of penalties under sections 76, 77, and 78 of the Finance Act, 1994, discrepancy in reflecting true value of services in ST-3 returns, contention of appellant regarding payment of service tax based on receipts instead of accruals, applicability of penalties for non-disclosure of true value in returns, reliance on case laws for defense.

Analysis:
The appeal before the Appellate Tribunal CESTAT Hyderabad involved a dispute regarding the service tax liability of the appellant for providing ground handling services to airlines at airports during the period 2008-09 to 2012-13. The original authority had issued a show cause notice alleging incorrect discharge of service tax liability and proposed a demand of ?26,28,638 along with penalties under various sections of the Finance Act, 1994. The authority found that the appellant had not fully discharged their service tax liability based on the net gross receipts and imposed a demand of ?2,76,702 along with penalties. The Commissioner (Appeals) upheld the original order, leading to the appeal before the Tribunal.

The appellant contended that they were not liable to pay tax for airport services before July 2010 as they were not authorized by the Airports Authority of India. For the subsequent period, the appellant explained that the discrepancy in service tax payment arose from considering receipts instead of accruals. The appellant argued that this was a genuine mistake and requested a remand for recalculation. However, the appellant failed to provide evidence of subsequent tax payments. The appellant also argued against the imposition of penalties, citing various case laws in support of their position.

On the other hand, the Departmental Representative reiterated that the appellant had not disclosed the true value of services in their ST-3 returns and had not paid the service tax accordingly. The Department emphasized the appellant's responsibility for accurate disclosure and payment of service tax as per rules. The Department relied on case laws to support their stance.

After considering the submissions and case laws from both sides, the Tribunal found that the appellant had not correctly reflected the value of services in their returns or paid the service tax accordingly. The Tribunal rejected the appellant's request for remand, stating that the original authority could not investigate beyond the scope of the show cause notice. The Tribunal upheld the penalties imposed under sections 76, 77, and 78 of the Finance Act, 1994, concluding that the appellant had suppressed the value of services and evaded tax payment. The Tribunal found no grounds to interfere with the Order-in-Appeal and rejected the appeal.

In conclusion, the Tribunal upheld the original authority's decision regarding the service tax liability, penalties, and the rejection of the appeal by the Commissioner (Appeals), emphasizing the appellant's responsibility for accurate disclosure and payment of service tax.