2019 (5) TMI 232 - AT - Service Tax

Business Auxiliary Services - Service tax collected but not paid - Section 73(1) of the Finance Act, 1994 - HELD THAT - Admission of appellant, in the appeal memo and addendum to it, indicates that appellant had taken Service Tax registration and signed commission documents issued by M/s TTML in which service tax component has been specifically segregated. It further admitted in page 7(2) of the appeal memo that appellant had not respondent to the letters of the respondent and kept mum that resulted in confirmation of the duty demand. In respect of reference to non-existence of Section 73(1A) as referred in the corrigendum notice, it cannot be said that the ingredient of allegations made in the show-cause notice has not made out a case under Section 73(1). It is a settled principle of law that wrong mentioning of appropriate charging sections or provisions will not vitiate the proceedings, if ingredients of the provision is well made out in the charge. However, having record to the fact that Commissioner had not dealt with the penalty aspect as well as extended period, and department has not appealed against it, finding on penalty is not given here, though a clear case of extended period is well made out, in view of the suppression by the appellant in collecting the Service Tax from the service receiver and not crediting the same to the Government treasury. Appellant is liable to pay Service Tax of ₹ 92,118/- collected by it from M/s TTML towards services provided under Business Auxiliary Services along within applicable interest within a period of three months from the date of receipt of this order - appeal dismissed - decided against appellant.

Summary

Issues:
1. Duty demand under Section 73(1) vs. Section 73(1A) of the Finance Act, 1994
2. Applicability of small scale exemption and eligibility for SSI
3. Cross-examination of witness and duty liability
4. Collection of Service Tax and non-crediting to the Government treasury
5. Penalty aspect and extended period

Analysis:

Issue 1: Duty demand under Section 73(1) vs. Section 73(1A) of the Finance Act, 1994
The appellant contested the duty demand confirmed under Section 73(1) by the Commissioner, arguing that the show-cause notice was issued under Section 73(1A) which was not in existence at the relevant time. However, the Tribunal held that the wrong mention of the charging section in the notice does not vitiate the proceedings if the ingredients of the provision are established. The duty demand was deemed sustainable under Section 73(1) alone.

Issue 2: Applicability of small scale exemption and eligibility for SSI
The appellant claimed eligibility for small scale exemption under Notification No. 05/2008 and argued that it was eligible for SSI under previous notifications. The Tribunal noted that no notification allowed tax collection on behalf of the Government without crediting it to the treasury. As the appellant collected Service Tax without depositing it, the exemption claim was dismissed.

Issue 3: Cross-examination of witness and duty liability
The appellant raised concerns about not being allowed to cross-examine the witness whose statement was relied upon to establish the duty liability. However, the Tribunal found that the appellant did not request cross-examination during the adjudication process, remained absent, and did not respond to the show-cause notice. As a result, the witness statement was accepted as true by the authorities.

Issue 4: Collection of Service Tax and non-crediting to the Government treasury
The Tribunal emphasized that the appellant collected Service Tax from the service receiver but failed to credit it to the Government treasury. Despite the appellant's claim that the signature on the commission statement was on nil tax documents, the Tribunal found the appellant liable for the tax collected.

Issue 5: Penalty aspect and extended period
While the Commissioner did not address the penalty aspect, and the department did not appeal against it, the Tribunal noted a clear case of an extended period due to the suppression by the appellant in collecting Service Tax and not crediting it to the Government treasury. The Tribunal did not make a finding on the penalty but highlighted the need for the appellant to pay the confirmed Service Tax amount along with applicable interest within three months.

In conclusion, the Tribunal dismissed the appeal and confirmed the duty demand, holding the appellant liable for the Service Tax collected from the service receiver.