2019 (2) TMI 947 - AT - Service Tax

Security Services - non-payment/short-payment of service tax - it was alleged that value of the services were suppressed along with suppressing of rendering of certain services - benefit of cum-duty - Held that - The benefit of cum duty is required to be extended to the appellant - The demand has been raised for the full consideration received by the appellant from their customers. This fact itself establishes that there was no service tax recovered by them from the service recipient. If the appellant was recovering service tax separately from the service recipient, the demand would have been raised in terms of the provisions of Section 73 A of the Finance Act. The fact that it has not been raised under the said section itself leads to inevitable conclusion that no service tax was being recovered by the appellant from their clients - matter remanded to Commissioner for re-quantification of the demand of service tax, after extending the benefit of cum duty. Penalty u/s 78 - Benefit of reduced penalty - Held that - The Commissioner, in his impugned order, has extended the option to the assessee to pay all the dues within a period of 30 days of communication of the order in which case penalty payable would get reduced to 25% of the total tax confirmed against them. The appellant has not exercised the option given by the Commissioner and as such, at this point of time, they cannot claim the benefit of the said provision of law - the matter is being remanded for the re-quantification of the tax amount the penalty amount would also get reduced to the tax confirmed against them. Appeal allowed by way of remand.

Summary

Issues:
1. Confirmation of service tax demand under 'Security Services' category.
2. Suppression of service value and non-payment of service tax.
3. Benefit of cum duty extension.
4. Imposition of penalty under Section 78 of the Finance Act, 1994.

Confirmation of Service Tax Demand:
The judgment confirms the service tax demand of ?1,09,81,378 against the appellant for the period from 2007-08 to 18.02.2010 under the category of 'Security Services'. The appellant was registered under this category and had been filing returns and discharging service tax. However, investigations revealed suppression of service value and non-payment of service tax amounting to ?1.09 crores. The appellant filed a revised ST-3 return and paid around ?35 lakhs after a search operation. Subsequently, proceedings were initiated leading to the confirmation of the demand and imposition of penalties under relevant sections of the Finance Act, 1994.

Suppression of Service Value and Non-Payment of Service Tax:
The investigations found that the appellant suppressed the value of services and the rendering of certain services, resulting in non-payment of service tax amounting to ?1.09 crores. The appellant admitted the suppression and non-disclosure of facts regarding service value and rendering of services. The Commissioner's order confirmed the demand and imposed penalties under Section 77 of the Act. The appellant's Chartered Accountant conceded the suppression but argued for the extension of cum duty benefit as per settled law.

Benefit of Cum Duty Extension:
The judgment acknowledges the appellant's plea for the benefit of cum duty extension. It notes that the demand was raised for the full consideration received by the appellant from customers, indicating no recovery of service tax from clients. As per Section 73A of the Finance Act, if service tax was recovered separately, a different demand provision would apply. The Tribunal agreed with the appellant's argument for cum duty benefit and remanded the matter to the Commissioner for re-quantification of the service tax demand after extending the said benefit.

Imposition of Penalty under Section 78:
Regarding the penalty imposed under Section 78 of the Finance Act, 1994, the appellant argued that they had deposited a portion of the tax before the issuance of the show cause notice. They sought a reduced penalty of 25% of the deposited amount based on a Tribunal decision. However, the Tribunal found that the Commissioner had already extended the option to pay all dues within a specified period, leading to a reduced penalty. As the appellant did not exercise this option, the Tribunal declined to interfere with the penalty amount. The penalty amount would also be reduced proportionately with the re-quantification of the tax amount upon remand.

The appeal was disposed of accordingly.