2018 (6) TMI 1419 - AT - Service Tax

Principles of natural justice - case of appellant is that he has no idea whether any such challans have been produced before the adjudicating authority or not but he requested that since the adjudicating authority has not dealt with the challans, therefore, this matter may be remanded to the adjudicating authority for denovo adjudication - Held that - It is fit and appropriate, in the interest of justice, to set aside the impugned order and remand the matter to the adjudicating authority for denovo adjudication - appeal allowed by way of remand.

Summary

Issues:
1. Service tax liability on recovery agent services.
2. Non-cooperation with investigation and production of records.
3. Denial of cum-tax benefit for calculation of service tax liability.
4. Request for remand for denovo adjudication.

Analysis:
1. The case revolved around the service tax liability of the appellant for providing recovery agent services to a bank. The department alleged non-payment of service tax and issued a show cause notice demanding payment of ?12,64,470 along with interest and penalty. The lower authorities upheld a demand of ?11,15,493. The appellant contended that they were compliant with tax regulations, regularly filing returns, and disputing the quantification of the demand. They argued for cum-tax benefit and provided evidence of timely tax payments, seeking a reduction in the demand amount.

2. The appellant's non-cooperation with the investigation was highlighted by the department, stating that no records were produced before the adjudicating authorities or the appellate authority. The appellant, however, claimed to have submitted challans as evidence of tax payments, which were not considered by the lower authorities. The appellant's advocate requested a remand for denovo adjudication to ensure a fair examination of the challans and their impact on the case.

3. The legal analysis delved into the provisions of the Finance Act, 1994, regarding recovery agent services and service tax liability. The Tribunal acknowledged that the appellant's services fell within the ambit of taxable "Recovery Agent Service" both before and after regulatory changes. The appellant's compliance with tax laws, including timely payments and recorded transactions, was emphasized to counter any allegations of evasion or suppression of facts attracting penal provisions.

4. Ultimately, the Tribunal, in the interest of justice, set aside the impugned order and remanded the matter to the adjudicating authority for denovo adjudication. The directive included a requirement for the appellant to produce all original challans for thorough examination by the authority, ensuring a fair and comprehensive review of the case before any final decisions were made. The appeal was allowed by way of remand, emphasizing the importance of due process and proper consideration of all relevant evidence in resolving the dispute.