2019 (3) TMI 416 - AT - Service Tax

Non-payment of service tax - maintenance and repair service - case of appellant is that tax liability has been wrongly arrived at - Held that - Learned Commissioner (Appeals) in the impugned order dated 28.02.2018 has recorded the submissions of the appellant at paragraph 3 in the grounds of appeal that quantum of service tax is incorrect and that the correct demand should be Rs. ₹ 3,04,452/-. However, no findings were recorded in the said order, quantifying the actual service tax liability, which was required to be paid by the appellant, The matter should go back to the original Authority for computation of the correct tax liability - appeal allowed by way of remand.

Issues:
Non-payment of service tax on maintenance and repair services; Disputed service tax demand; Imposition of penalties under Section 77 and 78 of the Finance Act, 1994; Discrepancy in the actual service tax liability; Application of penalties under Section 78 of the Act based on fraud, suppression, or misstatement.

Issue 1: Non-payment of service tax on maintenance and repair services

The matter revolves around the non-payment of service tax on maintenance and repair services provided by the appellant. The original authority confirmed a service tax demand of ?5,05,894 along with interest and imposed penalties under Section 77 and 78 of the Finance Act, 1994. The Commissioner (Appeals) upheld the demand, leading to the appellant's appeal before the Tribunal.

Issue 2: Disputed service tax demand

The appellant contended that the actual service tax liability should be ?3,04,452 instead of the confirmed amount. The appellant argued that although the taxable service was provided during the disputed period, the recipient did not pay for the service, resulting in the amount being written off in the balance sheet. The appellant presented evidence to support this claim, asserting that there was no intent to defraud the government revenue.

Issue 3: Imposition of penalties under Section 77 and 78 of the Finance Act, 1994

The Tribunal noted that while the appellant did not dispute the liability to pay service tax, the appellant argued that the tax liability was incorrectly calculated. The Tribunal found that the Commissioner (Appeals) did not quantify the actual service tax liability in the impugned order. Consequently, the matter was remanded to the original authority for accurate computation of the tax liability and issuance of a fresh adjudication order.

Issue 4: Application of penalties under Section 78 of the Act based on fraud, suppression, or misstatement

Regarding the imposition of penalties under Section 78 of the Act, the Tribunal considered that since the appellant did not receive payment for the taxable service, it could not be deemed to have intended to evade tax payment. The Tribunal concluded that the penalty under Section 78 could not be sustained as there was no evidence of fraud, suppression, or misstatement with the intent to evade tax. The penalty under Section 78 was set aside, while the penalty under Section 77 was upheld.

In conclusion, the Tribunal remanded the matter for the correct computation of the tax liability and set aside the penalty under Section 78 of the Act, allowing the appeal in favor of the appellant on that aspect. The appeal was disposed of accordingly.

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