2018 (12) TMI 385 - AT - Service Tax

Short payment of service tax - it was alleged that the service provider suppressed the actual amount of cable service charges in the guise of repair charges and new connection material charges and for purchase of spare parts - principles of natural justice - Held that - The original authority has passed the order mainly relying upon the contents of the letter dated 09.06.2006 which was withdrawn by the appellant and the same cannot be considered to be reply to the show-cause notice. Further the original authority has also not considered other submissions of the appellant. Further, the order-in-original was passed in violation of the principles of natural justice as the contentions raised by the appellant in their letter dated 11.08.2006, 19.09.2006 and 10.11.2006 have not been considered. Further, both the authorities have wrongly imposed penalty under Section 76 and 78 which cannot be legally imposed - Further there is a calculation error in the computation of service tax and it appears that the adjudicating authority has taxed ₹ 1,85,392/- again. The matter is remanded to the original authority to consider the submissions of the appellant submitted in letters dated 11.08.2006, 19.09.2006 and 10.11.2006 and pass a fresh order in accordance with law after considering the cenvat claim of the appellant also - appeal allowed by way of remand.

Summary

Issues:
- Appeal against the impugned order dated 15.12.2008 passed by the Commissioner (Appeals)
- Allegations of short payment of service tax by a registered service provider
- Consideration of letter dated 09.06.2006 as a reply to show-cause notice
- Non-consideration of other submissions by the appellant
- Imposition of penalties under Section 76 and 78 simultaneously
- Calculation error in the computation of service tax

Analysis:
The case involved an appeal against an order confirming service tax short payment by a service provider for the period from August 2002 to September 2005. The appellant, a cable operator, was alleged to have suppressed actual service charges leading to the underpayment of service tax. The Commissioner (Appeals) had upheld the original order but directed the adjudicating authority to examine the cenvat credit issue. The appellant challenged the order on various grounds, including the consideration of a particular letter as a reply to the show-cause notice, withdrawal of said letter, and non-consideration of other submissions made. The appellant also argued against the simultaneous imposition of penalties under Section 76 and 78, citing legal precedent.

Upon review, the Tribunal found that the original order heavily relied on a withdrawn letter as a reply to the show-cause notice, neglecting other submissions by the appellant. The Tribunal noted a violation of natural justice principles and errors in the imposition of penalties under Sections 76 and 78. Additionally, a calculation error in the service tax computation was identified, leading to an incorrect taxation amount. Relying on legal precedents and inconsistencies in the case, the Tribunal concluded that the impugned order was unsustainable in law. Consequently, the matter was remanded to the original authority for a fresh order, emphasizing the consideration of all appellant submissions and the cenvat claim. The appeal was allowed by way of remand, setting aside the original order.

In summary, the Tribunal's decision highlighted procedural irregularities, failure to consider all submissions, incorrect penalty imposition, and computational errors in the service tax amount. The case was remanded for a fresh order to ensure compliance with legal principles and a thorough review of all relevant aspects, ultimately allowing the appeal in favor of the appellant.