2019 (3) TMI 612 - AT - Service Tax

Principles of natural justice - alleged non-payment of service tax - Broadcasting agency service - case of Revenue is that in the impugned order, the adjudicating authority has mis-understood and mis-construed the remand direction by this Tribunal and reduced the demand without proper verification of the relevant records, invoices, etc. - Held that - During the relevant period, the appellant has provided taxable service under the category of broadcasting agency service . Also in the first round of litigation the liability to service tax under the said taxable category has attained finality on merit. However, for computation of the demand, the matter was remanded to the adjudicating authority - On a careful reading of the order of this Tribunal it is clear that the figures entered in the charts referred to in the said order needs verification and the Learned adjudicating authority was at liberty to call for further evidences to ascertain whether these expenses were incurred on behalf of the clients so as to be eligible as reimbursable expenses for deduction while computing the taxable value - All other issues including the plea of time-bar are left open for denovo decision - appeal allowed by way of remand.

Summary

Issues:
Appeals filed by both assessee and Revenue against Order-in-Original; Misinterpretation of remand direction by the adjudicating authority; Verification of reimbursable expenses for deduction in taxable value; Failure to analyze expenses borne on behalf of clients; Mechanical application of Chartered Accountant's certificate; Setting aside the impugned order and remanding the matter for fresh consideration.

Analysis:
The judgment involves four appeals - two by the assessee and two by Revenue against the same Order-in-Original. The case pertains to the provision of taxable service under the category of 'broadcasting agency service' during a specific period. Initially issued a show cause notice for non-payment of service tax, the demand was confirmed with interest and penalty. Upon appeal, the Tribunal remanded the matter to re-compute the liability by considering reimbursable expenses claimed by the assessee. Subsequently, another show cause notice was issued for a different period, resulting in reduced demands and penalties imposed. The appeals were filed against the confirmation of demand by the assessee and the reduction of demands by the Revenue.

The main contention raised was the misinterpretation of the remand direction by the adjudicating authority. The Authorized Representative argued that the adjudicating authority wrongly reduced the demand without proper verification of relevant records and invoices, emphasizing the need to consider the nature and admissibility of reimbursable expenses. It was suggested that the matter should be remanded to reconsider the nature and quantum of expenditures as reimbursable expenses based on supporting evidence.

On the contrary, the Advocate for the assessee contended that the adjudicating authority correctly allowed reimbursable expenses as deductions based on Chartered Accountant's certificate and balance sheet figures. While agreeing to verify the nature of expenses, it was highlighted that issues other than reimbursable expenses should not be reopened as they had attained finality.

After hearing both sides, the Tribunal found that the adjudicating authority failed to properly analyze whether the expenses qualified as reimbursable and mechanically applied the Chartered Accountant's certificate. Consequently, the impugned order was set aside, and the matter was remanded to ascertain the nature, correctness, and eligibility of expenses for deduction. It was clarified that issues decided in favor of the assessee and not challenged by Revenue would not be reconsidered. The appeals were allowed by way of remand, emphasizing the need for a fresh consideration of the issues.

In conclusion, the judgment addressed the misinterpretation of the remand direction, the verification of reimbursable expenses, and the need for a thorough analysis of expenses to determine their eligibility for deduction in the taxable value. The decision highlighted the importance of following the remand order accurately and considering all relevant evidence before computing the demands.