2018 (7) TMI 999 - AT - Service Tax

Principles of Natural Justice - non-payment of Service Tax - Various letters were issued to the noticee and finally the summons to furnish data / documents were served upon him. But the noticee or the respondent failed to comply with the same except for providing some incomplete copies of balance-sheets for the years 2008-09 and 2009-10 - Best judgement assessment u/s 72 of FA 1994 done. Held that - The Respondent should be allowed one more opportunity to prove that no service was rendered and no consideration was received during the period covered by the Show Cause Notice and that the record of ROC is not correct. The learned representative of the Respondent offered to submit a CA s certificate to this effect - To facilitate submission and consideration of such a certificate the impugned order is set aside and matter remanded to the adjudicating authority for a de novo decision - appeal allowed by way of remand.

Issues:
1. Department's appeal against Order-in-Original No. 19/SC/CCE/ST/2014 dated 14.07.2014.
2. Alleged non-discharge of Service Tax liability by the respondent firm.
3. Invocation of best judgment provision under Section 72 of the Finance Act, 1994.
4. Demand of Service Tax, interest, and penalties under Sections 73, 75, 76, 77, and 78 of the Act.
5. Respondent's defense based on company winding up, lack of business activity, and absence of income.
6. Failure to provide complete and relevant information by the respondent.
7. Request for submission of a certificate from a Chartered Accountant by the respondent.
8. Assessment of the case by the Appellate Tribunal.

Detailed Analysis:
1. The department's appeal was against the Order-in-Original No. 19/SC/CCE/ST/2014, where the Commissioner dropped proceedings initiated through a Show Cause Notice dated 23.04.2013. The department demanded Service Tax amounting to ?32,62,52,414/- for the period 2007-08 to 2011-12, invoking Sections 73, 75, 76, 77, and 78 of the Finance Act, 1994.

2. The department alleged that the respondent firm, part of M/s Mukher Group of Companies, was engaged in taxable Management Consultancy Services and Management Maintenance or Repair Services but failed to discharge their Service Tax liability. The best judgment provision under Section 72 was invoked due to the respondent's non-compliance in providing necessary information.

3. The respondent contended that the Show Cause Notice was based on presumption and that their company, M/s Resolution Capital and Global Pvt. Ltd., incorporated in 2007, did not conduct any business and eventually wound up operations. The respondent emphasized the lack of income, the company's winding up affirmed by the Delhi High Court, and the absence of revenue generation.

4. The Appellate Tribunal noted discrepancies in the department's case, including reliance on incomplete data from the Ministry of Corporate Affairs and lack of financial documents to substantiate revenue allegations. The respondent's financial records indicated no service income, challenging the department's claims.

5. The Tribunal highlighted the respondent's failure to register under Service Tax despite being incorporated for taxable services. It criticized the Commissioner for not considering provided balance sheets and the respondent's lack of cooperation in supplying complete business details.

6. Despite observations, the Tribunal granted the respondent an opportunity to prove no service was rendered and no consideration received during the period in question. The matter was remanded to the adjudicating authority for a fresh decision upon submission of a Chartered Accountant's certificate within three months.

This detailed analysis covers the issues raised, arguments presented, and the Tribunal's decision in the legal judgment.

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