2019 (6) TMI 383 - AT - Service Tax

Non-payment of service tax - period October 2010 to March 2015 - appellant had not discharged payment of service tax because of non receipt of payments from the clients, however off late he deposited the service tax in the course of adjudication - demand based on the figures appearing in Form 26AS statement filed by the clients - HELD THAT - The value of taxable services cannot be arrived at merely on the basis of the TDS statements filed by the clients inasmuch as even if the payments are not made by the clients, the expenditures are booked based on which the Form 26AS is filed, which cannot be considered as value of taxable services for the purpose of demand of service tax - the ends of natural justice would be met if the matter is sent back to the Original adjudicating authority for the purpose of correct computation of service tax demand and interest thereon as per law. Services provided to National University of Study and Research in Law, Ranchi - HELD THAT - I am not convinced with the arguments made by the appellant inasmuch as the phrase any person used in the definition of taxable services for being the service recipient, shall also include the government bodies. No specific exemption notification has been pointed out by the appellant pertaining to the period prior to 1st July, 2012, under which the appellant claimed their services to be exempt. It is my considered view that the appellant is not entitled to any relief on this count and held accordingly. Adjustment of excess service tax of ₹ 42,776/- for the period 2013-14 - HELD THAT - From the total service tax liability for the impugned period October 2010 to March 2015, there is no dispute with regard to the fact that there has been excess payment of tax. When both the excess and short payment of tax has arisen during the period in dispute, there is no reason for not allowing the adjustment of excess amount of tax paid - the assessee is entitled for adjustment of excess amount of tax paid. Penalty - HELD THAT - It is not a case where the service tax collected from the client has not been deposited. Therefore, there was a reasonable cause for delay in payment of service tax for which the appellant would be liable to pay interest as per law - however the appellant is entitled for waiver of penalty under Section 80 of the Act even in the instant case where extended period of limitation has been invoked - penalties set aside. Appeal allowed by way of remand.

Summary

Issues:
1. Discrepancy in service tax payment for the period October 2010 to March 2015.
2. Appropriation of excess service tax payment for 2013-14 against arrears.
3. Dispute regarding inflated figures in Form 26AS.
4. Service tax liability for services provided to a government body.
5. Penalty imposition for delayed service tax payment.

Analysis:

1. The appellant, a security services firm, faced investigation for non-payment of service tax. The Adjudicating Authority confirmed a demand of ?20,45,427 with penalties. The Ld. Commissioner (Appeals) reduced the demand to ?16,93,934 but rejected the adjustment of excess payment for 2013-14. The appellant disputed the figures in Form 26AS, stating they were not the correct value of taxable services. The Tribunal found the demand based on Form 26AS questionable and ordered a re-computation.

2. The appellant sought to appropriate the total service tax paid during investigation and adjudication. They also argued for adjusting excess tax paid in 2013-14 against arrears. The Tribunal agreed that excess payment should offset the short payment, citing relevant case law supporting such adjustments.

3. The appellant contended that inflated figures in Form 26AS were not accurate representations of taxable services. They highlighted communication efforts with clients to rectify discrepancies. The Tribunal acknowledged the appellant's concerns and emphasized the need for a correct computation of service tax demand based on actual invoices and financial statements.

4. Regarding service tax liability for services to a government body, the appellant claimed exemption pre-2012 due to the recipient being a government entity. However, no specific exemption was cited, leading the Tribunal to uphold the liability.

5. The appellant faced penalties for delayed service tax payment, citing financial constraints due to delayed client payments. The Tribunal considered the reasons for the delay and granted a waiver of penalties under Section 80 of the Act, emphasizing the appellant's compliance with accounting practices and lack of willful suppression.

In conclusion, the Tribunal remanded the case for re-computation of the service tax demand, allowed the adjustment of excess tax paid, upheld the liability for services to a government body, and waived penalties due to reasonable causes for delayed payment.