2018 (8) TMI 1173 - AT - Service Tax

Telephone Service - Internet Telecommunication Service - Leased Circuit Service - Reverse Charge Mechanism - demand of Service Tax - Held that - Since all the relevant documents showing that the service tax was paid by the appellant to the service providers were filed before the Adjudicating Authority, the demand cannot be collected again from the appellant. This is a case of procedural lapse and it has been decided in various decisions by the Tribunal, Hon ble High Courts and Hon ble Supreme Court time and again that tax cannot be demanded for the second time once it has been established that it was already paid by the appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Alleged contravention of Sections 68, 70, and 75 of the Finance Act, 1994 for the period July 2012 to September 2012. Confirmation of demand of service tax, interest, and penalties under Sections 77 and 78 by the Adjudicating Authority. Upholding of the adjudication order by the ld. Commissioner (Appeals). Appeal before the Tribunal.

Analysis:

1. Alleged Contravention of Finance Act Sections:
The appellant, a provider of various services, was issued a Show Cause Notice for contravention of Sections 68, 70, and 75 of the Finance Act, 1994. The Adjudicating Authority confirmed the demand of service tax, interest, and imposed penalties. The ld. Commissioner (Appeals) upheld this decision, leading to the appeal before the Tribunal.

2. Reverse Charge Mechanism and Procedural Lapse:
The appellant argued that after the introduction of the Reverse Charge Mechanism, they paid the service tax to the service provider as per instructions, which was then deposited by the service providers. The appellant claimed this as a procedural lapse without any revenue loss to the government. They highlighted their regular compliance post the disputed period. Reference was made to a Supreme Court decision supporting their stance.

3. Arguments and Counter-Arguments:
The Advocate for the appellant presented various replies indicating delays due to the late receipt and implementation of a specific notification, leading to the late compliance with circulars. The appellant demonstrated that the service tax was paid to the service providers, and there was no intention to evade payment. Reference was made to a Supreme Court decision supporting the appellant's position. The Department reiterated the lower authorities' orders.

4. Judicial Precedents and Conclusion:
The Tribunal examined the arguments, including the appellant's compliance post the disputed period and the relevant documents showing payment to service providers. Citing judicial precedents, including a Supreme Court decision, the Tribunal concluded that the demand raised in the Adjudication Order could not be sustained. Consequently, the demand, interest, and penalties were set aside, and the appeal by the appellant was allowed.

In summary, the Tribunal's decision was based on the appellant's compliance with the Reverse Charge Mechanism, procedural lapses, absence of revenue loss to the government, and judicial precedents supporting the appellant's position. The Tribunal set aside the demand, interest, and penalties, allowing the appeal in favor of the appellant.