2019 (4) TMI 1697 - AT - Service Tax

Business Auxiliary Service - appellant had collected commission and had accounted ₹ 33,08,870/- as agency commission for the period April 2008 to February 2009 from its group Companies for marketing of products - HELD THAT - It is difficult to accept as to how the character of Agency commission changes when it comes to service tax, on its own, without there being any documentary evidence, much less basic documents, furnished. If not agency commission, then the discount which is normally given to the buyer/end user, but the same is enjoyed by an intermediary/appellant. Books reflect it as agency commission but the appellant claims it, contrary to that, as discount. The same has been offered and has accordingly suffered income tax. In the absence of explicit supporting documents, even we find it difficult to dethrone the findings of Ld. Commissioner. Substantial difference between the taxable value declared in the ST-3 return and the service income shown in the profit loss Account - HELD THAT - The appellant while accepting the difference, has taken the stand that the alleged difference was because of the reason that it was maintaining a consolidated/common balance sheet for all its three units, they had undertaken software development, appellant s unit had recorded the payment of labour charges, that it was showing only income even though the same was not received during the year as it was following accrual system, etc. but it is even surprising to note that the appellant has tested the Commissioner also, by not bothering to produce any documents - we are compelled to accept the findings of Ld. Commissioner who has given a thread-bear analysis based on the best of his judgment due to the non-co-operation of the appellant - impugned order upheld. CENVAT Credit - duty paying documents - appellant did not produce any documents based on which they had taken cenvat credit for the period October 2004 to March 2008 - Rule 9 of Cenvat Credit Rules, 2004 - We are remitting this issue to the file of adjudicating authority to pass de-novo order after affording reasonable opportunities to the appellant. Extended period of limitation - HELD THAT - There is no ground to interfere with the findings of the lower authority, the appellant could not produce basic documents in time, during audit, etc., that prompted SCNs which is in order. The revenue collated details after audit and issued the notices after analyzing the same and it is not the case that the appellant volunteered to offer explanation in between, when the fact of its non-production of documents was very much on board - invocation of extended period upheld. Appeal disposed off.

Summary

Issues:
1. Allegations of collecting commission and not accounting for it properly
2. Discrepancy between taxable value declared in returns and service income in profit & loss account
3. Irregular availment of Cenvat credit

Allegations of Collecting Commission:
The appellant was accused of collecting commission from group companies for marketing products, which was considered taxable under Business Auxiliary Service. The appellant argued that the amount received was a discount, not agency commission, and there was no formal agreement for collecting agency commission. However, the tribunal found it challenging to accept the appellant's claims without supporting documents, leading to dismissal of this ground of appeal.

Discrepancy in Taxable Value Declaration:
The appellant consolidated accounts for all divisions, leading to discrepancies in the taxable value declared in returns and service income in the profit & loss account. Despite explanations, the appellant failed to provide essential documents for verification. The tribunal upheld the Commissioner's findings due to lack of cooperation and supporting evidence, dismissing this ground of appeal.

Irregular Availment of Cenvat Credit:
The appellant faced allegations of irregularly availing Cenvat credit without producing necessary documents. The tribunal noted discrepancies in the availed credits but remitted the issue back to the adjudicating authority for a fresh decision after considering the appellant's submissions and providing reasonable opportunities for clarification. Some disallowances were set aside based on the lack of supporting documents and unjustified denials of credit.

The tribunal found the appellant's lack of document submission and cooperation detrimental to their case. The invocation of a larger period of limitation for issuing show cause notices was deemed appropriate due to the appellant's failure to produce essential documents in a timely manner. The appeal was disposed of based on the tribunal's detailed analysis and findings on the issues raised.